Norges Bank kept rates steady but maintained a tightening bias, with markets pricing reduced odds of a September hike after softer inflation and wage data.
Norges Bank left its policy rate unchanged at 4.25%, aligning with expectations, but retained a tightening bias amid persistent inflation concerns. The decision follows weaker-than-expected summer inflation, though policymakers stressed that price pressures remain elevated.
Recent data showed annual wage growth slowing to 4.0% in Q2 from 4.3% in Q1, below the central bank’s 4.5% forecast for 2026. Oil investment projections were revised upward for 2026 and 2027, though nominal declines of 0.1% this year and 0.9% in 2025 were expected.
The Norwegian krone weakened after the announcement, compounded by a drop in oil prices. Markets now see a finely balanced decision for a potential September hike, with odds declining.