Financial News: Norway Central Bank Holds Rate; Set To Loosen

Norway Central Bank Holds Rate; Set To Loosen Policy In March

01/23/2025 - 05:20:00 (RTTNews)

(RTTNews) - Norway's central bank left its key interest rate unchanged as widely expected on Thursday and reaffirmed that the rate will likely be reduced in March as rapid rise in business costs could stoke inflation ahead.

The Monetary Policy and Financial Stability Committee of Norges Bank decided to hold the policy rate unchanged at 4.5 percent.

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

The committee assessed 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.

Governor Ida Wolden Bache said, "The policy rate will likely be reduced in March." This would be the first reduction since May 2020.

The governor said inflation has moved closer to target but the rapid rise in business costs is likely to contribute to stoking inflation ahead.

Further, the committee observed that the implications of higher trade tariffs on price prospects in Norway are uncertain.

Capital Economics' economist Jack Allen-Reynolds said the bank is likely to loosen monetary policy a little more quickly than its latest projections imply.

The path of inflation will allow the Norges Bank to move a bit more quickly, cutting by 25 basis points once per quarter until the policy rate reaches 3 percent in the middle of 2026, the economist added.

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