Norges Bank cuts rates to 4%
By Michele Maatouk
Date: Thursday 18 Sep 2025
(Sharecast News) - Norges Bank cut its policy rate on Thursday by 25 basis points to 4% as it signalled a more gradual easing path going forward.
Governor Ida Wolden Bache said: "The job of bringing inflation back to target has not been completed, but a cautious easing of monetary policy will pave the way for returning inflation to target without restraining the economy more than needed.
"Incoming data since June indicate that there is a little less spare capacity in the economy, and that inflation may remain elevated for a little longer than projected in June. Therefore, we will probably not reduce the policy rate ahead as quickly as envisaged before summer."
Wolden Bache said the Bank does not envisage a large reduction in the policy rate ahead.
"The forecast presented today is consistent with one rate cut per year in the coming three years. In the projections, the average interest rate on residential mortgage loans declines to a little more than 4.5% in 2028," she said.
Francesco Pesole, FX strategist at ING, said: "Before this meeting, we were forecasting a rate cut in December following the move today. Based on today's communication, it is clear that the bar for further rate cuts is higher, as Norges Bank wants to see more compelling evidence of disinflation.
"However, the real positive rate remains elevated in Norway, and the shallower rate path can negatively influence business optimism that had partly relied on faster rate cuts. Our commodities team sees bearish risks for oil prices into year-end, and we expect the Fed to cut rates at the next four meetings, which could add pressure to Norges Bank.
"Norges Bank rate projections have also not been a very accurate indicator of policy moves this year, and the governor has highlighted flexibility for future moves.
"We are changing our call from December to January for the next Norges Bank move, which is still more dovish than the Bank's projections. But we think it's too early to entirely rule out a cut by the end of this year. Also, we expect the inflation picture to become benign enough in the coming quarters to justify at least another follow-up rate cut in 2026."
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