Norges Bank Projects Prolonged Easing as Growth Slows, Inflation Eases

Norway's central bank signaled a slower-than-expected economic recovery in the Nordic nation, reinforcing the likelihood of extended monetary easing. A regional survey conducted by Norges Bank revealed output is projected to rise 0.4% in the fourth quarter and 0.3% in the first quarter of 2026. The report also highlighted easing inflationary pressures, with core CPI slowing broadly as expected according to the survey.

Business contacts in Norway reported a slight decline in full capacity utilization compared to earlier this year, suggesting modest growth will persist into early 2026 but at a reduced pace.

Wage growth is expected to remain steady, with a 4.4% projection for 2025 and a slight upward revision to 4.1% for 2026. The findings could bolster the central bank's case for prolonging its easing campaign, which has already included only two post-pandemic rate cuts since June as reported.

Norges Bank's assessment comes ahead of its upcoming monetary policy meeting, with the latest data providing key insight into the country's economic trajectory. The central bank will evaluate the evolving inflation landscape and regional business expectations to determine its next move.

A Slower Pace of Easing

The central bank has been cautious in its approach to reducing interest rates, making only two cuts since the post-pandemic period began. With inflationary pressures receding and wage growth stabilizing, policymakers may now consider extending the easing timeline. This measured approach is consistent with the broader G-10 trend, where Norway has been among the most hawkish in maintaining borrowing costs.

The latest survey underscores that while output growth remains robust, the pace is moderating. This aligns with expectations of a more balanced economic expansion in the coming quarters. Norges Bank emphasized that business contacts anticipate a continued, though slightly subdued, growth path into the spring of 2026.

Business and Market Signals

The economic slowdown is also reflected in the banking sector. Bigbank AS reported growth in its loan and deposit portfolios for November 2025, with a 25 million euro increase in the loan portfolio and a 32 million euro rise in deposits. The bank attributed the deposit growth to rising interest rates and higher customer demand for term deposits. Despite the sale of its Swedish branch's loan portfolio, Bigbank maintained a strong position in the Baltic markets according to results.

Meanwhile, the broader financial landscape saw Aegon Ltd. announced plans to relocate its headquarters and legal seat to the U.S. The move is part of a strategic shift to align with market trends and is expected to impact earnings growth and cash flow projections. Aegon shares fell sharply in pre-market trading, reflecting investor uncertainty around the change according to market analysis.

Outlook for Payment Systems and Innovation

Norway's central bank also addressed the future of digital payment systems, stating it currently does not recommend the introduction of a central bank digital currency (CBDC). Norges Bank emphasized that a CBDC could be introduced in the future if necessary for maintaining a secure and efficient payment system. The decision reflects a cautious stance amid ongoing global experiments with digital currencies according to Reuters.

On the technology front, Nordic Semiconductor announced the launch of the nRF9151 SMA Development Kit, which supports both satellite and cellular IoT connectivity. The new tool is designed to enhance RF performance for engineers working on advanced cellular IoT and non-terrestrial network (NTN) applications. This development positions Nordic at the forefront of IoT innovation, particularly in challenging environments where connectivity is critical according to company announcement.

Strategic Moves in Nordic Financial Services

ABG Sundal Collier Holding ASA reinforced its Nordic presence by acquiring Danish M&A advisory firm FIH Partners A/S for up to 200 million kroner. The acquisition is part of a broader trend of global investment banks expanding their influence in the Nordic region. With over $170 billion in announced transactions in 2025, the Nordic M&A market is gaining international attention according to Bloomberg.

The consolidation in Nordic financial services highlights the competitive landscape, with traditional players like DNB Bank ASA also making strategic acquisitions. This trend underscores a growing demand for specialized advisory and financial services in the region, driven by increasing deal activity and cross-border interest.

Implications for Investors and Policymakers

Investors should closely monitor Norges Bank's upcoming policy decisions, as the central bank's extended easing timeline could influence borrowing costs and investment returns. Additionally, the performance of Nordic banks and financial services firms will depend on the pace of economic recovery and regional market dynamics.

The interplay between economic indicators, corporate actions, and monetary policy will shape the investment landscape in the coming months. As businesses and policymakers navigate a slower growth environment, strategic adjustments in both public and private sectors will be critical to maintaining economic resilience.