Danske now sees two Norway hikes in 2026, five cuts by 2028

Danske Bank's latest Nordic Outlook, released on March 4, 2026, indicates a divergent path for monetary policy across the region, with Norway facing distinct inflationary pressures compared to its neighbors. While the global economic outlook has improved due to a resilient manufacturing sector and cooling inflation in most areas, Norway remains an exception. The bank notes that inflation in Norway surprised strongly on the upside in January, driven by continued high wage and price growth. Consequently, Danske Bank now anticipates that Norges Bank may be forced to postpone previously signaled rate cuts, potentially leading to two additional rate hikes in 2026 to manage these persistent price pressures.

In contrast, the outlook for Sweden and Finland is brighter, with domestic growth expected to accelerate as inflation slows and fiscal policies boost household purchasing power. Denmark is also projected to transition from paper-based high growth to a more tangible expansion, driven by recovering consumer confidence and accelerating real wages. However, the Norwegian economy faces uncertainty, with the bank emphasizing that upcoming February inflation figures will be critical in determining the central bank's next moves. Despite these near-term challenges, growth in Norway is still expected to remain around trend levels through 2027, supported by consumption and private investment. Looking further ahead, the bank projects a cycle of five rate cuts by 2028 as inflationary pressures eventually subside and the economy stabilizes. This forecast underscores the region's varying economic cycles, where Norway's specific inflation dynamics necessitate a more hawkish stance in the immediate term compared to the broader Nordic trend of easing conditions.