PREVIEW: Norges Bank Policy Decision on 18th December 2025 at 09:00 GMT

** PREVIEW: Norges Bank (?? NO) Policy Decision on 18th December 2025 at 09:00 GMT**

• Norges Bank is expected to maintain its interest rate at 4.00% on 18th December 2025, with a 90% probability assigned by markets.
• Inflation remains above target but shows signs of improvement, while economic activity figures are weak.
• Analysts do not anticipate changes to the rate path, with potential downside risks noted.

Norges Bank is poised to keep its interest rate steady at 4.00% during its upcoming meeting on 18th December 2025, with market participants assigning a 90% probability to this outcome. Despite inflation remaining above target, recent data indicates a favourable trend for policymakers, as November's CPI-ATE figures came in slightly below expectations and under Norges Bank's own forecast. This development is seen as a positive sign following a hotter-than-expected report in October, suggesting that the disinflation process is back on track.

However, the economic activity backdrop presents a more concerning picture. Mainland GDP growth in the third quarter has cooled, falling short of expectations, and the latest Regional Network report highlights broad-based weaknesses in employment growth and capacity utilisation. These factors contribute to a bleak outlook for the Norwegian economy, which may influence future monetary policy decisions.

The focus of the upcoming meeting will not only be on the interest rate decision but also on updates to the rate path. Currently, the path does not indicate a full 25 basis point cut until the fourth quarter of 2026. Analysts from SEB and Nordea suggest that while a rate cut is not imminent, there are downside risks to the current path. SEB expects the rate path to remain unchanged at this meeting, but acknowledges the potential for adjustments in the future, particularly if economic conditions continue to deteriorate.

Governor Bache is scheduled to provide commentary following the policy announcement at 09:30 GMT, which will be closely watched by market participants for any hints on future policy direction. The current monetary policy report projects the policy rate to remain at 4.00% in the first quarter of 2026, gradually decreasing to 3.74% by the fourth quarter of 2026, and further to 3.34% by the fourth quarter of 2027.

In summary, while Norges Bank is expected to maintain its current interest rate, the weak economic activity data and potential downside risks to the rate path will be key areas of focus for traders and market participants. The commentary from Governor Bache may provide additional insights into the central bank's outlook and future policy considerations.

Trader Insight:

• Some traders may consider monitoring the Norwegian krone (NOK) for potential volatility following the interest rate decision and Governor Bache's commentary.
• Market participants are watching the performance of Norwegian banking stocks, such as DNB ASA (DNB), which could be impacted by the central bank's policy stance and economic outlook.
• Analysts note that traders are assessing the impact on Nordic bond markets, particularly Norwegian government bonds, given the potential for future rate path adjustments.

Disclaimer: This is not trading advice. For informational purposes only.