Danske Research notes that March core inflation in Norway remained at 3.0% year-on-year, slightly below the consensus and in line with Norges Bank’s projection, while headline inflation was 3.6% year-on-year. Norwegian wage arrangements indicate a wage enhance of 4.4% in 2026, which is seen as neutral for Norges Bank. Markets are currently pricing in a roughly equal chance of a rate hike in May compared to June.

Norges Bank terms are perceived as open

“Core inflation in Norway in March remained at 3.0% y/y, below the consensus of 3.1% y/y in line with Norges Bank’s forecast, while headline inflation was 3.6% y/y, slightly above Norges Bank’s forecast of 3.5% y/y.”

“The Norwegian wage agreement has ended with a central increase that is expected to result in an overall wage increase of 4.4% in 2026.”

“This is a result at the upper end of our expectations, but slightly lower than what Norges Bank assumed in the March monetary policy report. Therefore, the result should be neutral for Norges Bank.”

“With Norges Bank in March indicating a hike at “one of the upcoming monetary policy meetings,” the prints were considered more significant than usual for the short-term valuation of May compared with June as the most likely time for the first hike. “These prints leave the interest rate decision in May wide open as markets price in a roughly 50/50 chance of a hike.”

(This article was created with the support of an artificial intelligence tool and has been reviewed by an editor.)