BNP Paribas retains Norge Bank rate cut forecast for Q4
BNP Paribas maintained its call for Norway’s central bank to cut rates in the fourth quarter of 2015.
On Thursday the Norges Bank cut its key policy rate by 25bp from 1.25% to 1.0%, in line with market expectations.
“This is an action which is linked to economic growth rather than inflation. The bank cites both weaker growth and a softer economic outlook as the reasons for the cut,” BNP analyst Colin Bermingham said in a note.
BNP said the economic slowdown in Norway was likely to persist, and inventory accumulation would keep lid on oil prices in the region.
The slowdown lasted longer than anticipated, and this will start to weigh on inflation, Bermingham said.
“A weaker economy may also take the fizz out of house price inflation, which would curtail the increase in financial risk. We believe these factors support another cut,” the analyst said in a research note e-mailed to clients.