We expect Norges Bank to cut the interest rate in June given the low inflation momentum. This month, we expect it to keep the policy rate unchanged at 1.5% and give attention to the low inflation, but also the weaker-than-expected krone exchange rate.
Norges Bank’s forecast for the key policy rate in the Monetary Policy Report 1/13 in March implies a small probability of an interest rate cut in May this year. However, Norges Bank has underscored that this is only a technical possibility and foresee holding the current interest rate until spring next year. Norges Bank rarely deviates from its strategy at a policy meeting that is not backed up by a report. Also, given that there is only one month of inflation data available since the March report, and the other economic data, we expect an unchanged key policy rate in May.
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