PREVIEW: Norges Bank October Monetary Policy Meeting at 09:00BST on October 25th

The Norges Bank is unanimously expected to maintain interest rates at 0.75% at its interim October meeting on Thursday, according
to 17 economists polled, with all but one expecting the next rate increase to come in March next year. This is an “in-between” meeting,
where there is no press conference and the only release is the Executive Board’s statement of the decision.

PREVIOUS MEETING - At the September meeting the NB hiked rates to 0.75%, the first increase in 7 years, but a dovish stance
and a lower revision to the rate path showed a cautious tilt. This was based on the trade weighted NOK’s strength in the lead up to
the decision alongside “trade barriers" and “persistent uncertainty”.

CHANGES SINCE THE PREVIOUS MEETING

The drivers behind potential interest rate moves have been mixed since the September meeting. Surprises to the upside have come
from core inflation exceeding the NB’s expectations (1.9% vs. Exp. 1.6%) alongside higher global rates. Analysts at ING highlight
that the higher than expected inflation rate may be transitory because of the record-breaking summer temperatures, but still expect
the NB to revise up their inflation forecast in December.

In terms of the trade weighted NOK, this has strengthened in accordance with the NB’s forecast. Foreign interest rate rises and higher
oil prices argue in ING’s eyes however, for “somewhat higher rates”. They also say that should this trend persist “the NB may have
to revise up its interest rate forecast”.

In contrast to this positivity, Norway’s unemployment figures stagnated in September at 2.3% vs. the Norges’ expectation of a slight
fall. Further negativity could be read into the new monthly GDP figures, which came in very weak for August, however analysts at
Nordea have highlighted that these are “volatile and hard to take seriously”. They say that whilst production was weak at 0.2% and
dragged down by agriculture and fishing, this is likely to be judged as temporary noise.

EXPECTATIONS - Nordea say that whilst “News might be in sum slightly on the strong side [the] Norges Bank will probably conclude
as it often does on interim meetings: “Overall, the outlook and the balance of risks do not appear to have changed substantially since
the September Report””. This sentiment is echoed by ING, whom point to the September meeting, where the Norges Bank highlighted
their reluctance to raise rates faster than twice per year due to the indebtedness of Norwegian households. Analysts at Danske say
they “expect [the] Norges Bank to repeat the message that interest rates will be raised again during Q1, which is in line with market
pricing” and “do not expect any moves in NOK FX markets upon announcement”.

MONETARY POLICY COMMITTEE - Whilst not having an immediate monetary policy implication (as this is not slated to be imposed
until Q1 of 2019) some market participants will be watching for any comments on the possible establishment of a monetary policy
and financial stability committee in the Norges Bank. This will reportedly take decisions on the key policy rate and advise on measures
such as the counter cyclical buffer. By moving the responsibility to a separate committee, the Government say that the NB can be
more focused on other tasks, in particular management of the wealth fund.