Nordea predicts Norwegian interest rate hike to 4.5 percent

Nordea predicts that Norges Bank will implement another interest rate hike this autumn, potentially raising the policy rate from 4.25 percent to 4.5 percent. According to the bank's Economic Outlook report, rates could remain at this level until 2028.

Chief Economist Kjetil Olsen and Senior Strategist Sara Midtgaard suggest that while inflation figures showed some unexpected cooling during the summer, underlying price pressures remain high. They anticipate core inflation will rise again to settle around or slightly above 3 percent for the remainder of the year.

External factors, including the conflict in Iran, are noted as potential drivers for increased oil prices and freight rates, which could further heighten inflation risks. This outlook aligns with signals from Norges Bank Governor Ida Wolden Bache, who has indicated that further hikes may be necessary to ensure inflation returns to target levels.