Norges Bank Holds Policy Rate Steady At 4.5%, Signals March Cut

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(RTTNews) - The Norwegian central bank maintained its key interest rate at its December meeting on Thursday, as policymakers assessed that the current stance is needed to stabilize inflation around target and hinted that the rate will most likely be slashed in March next year.

The Monetary Policy and Financial Stability Committee, headed by Governor Ida Wolden Bache, decided to keep the policy rate at 4.50 percent, Norges Bank said in a statement on Thursday.

Since December 2023, Norway's policy rate has been held at 4.5 percent.

The current restrictive policy rate has cooled the Norwegian economy, while inflation has fallen markedly from the peak, the bank said. Nonetheless, the bank expects the rapid rise in business costs is expected to restrain further disinflation.

"The Committee judges that a restrictive monetary policy is still needed to stabilize inflation around target, but that the time to begin easing monetary policy is soon approaching," Bache said.

The policy board observed that the Norwegian economy appears to be holding up better than previously projected, while inflation pressures seem to have been a little more muted than previously assumed.

The banks also forecast a gradual reduction in the policy rate from the first quarter of 2025. Inflation is expected to be slightly above 2 percent at the end of 2027.

The policy board also cautioned about substantial uncertainty about the outlook for both the global and Norwegian economies, including the risk of an increase in international trade barriers.