The Norwegian central bank decided to hold its key interest rate steady during its December meeting on Thursday, aiming to stabilize inflation around its target. Policymakers hinted that an interest rate reduction is likely in March next year.
Governor Ida Wolden Bache, leading the Monetary Policy and Financial Stability Committee, announced that the policy rate remains at 4.50 percent, as stated by Norges Bank on Thursday.
Norway's policy rate has been set at 4.5 percent since December 2023.
According to the bank, the current restrictive policy rate has had a cooling effect on the Norwegian economy, with inflation significantly decreasing from its peak. However, the expectation is that rapidly increasing business costs may hinder further disinflation.
"The Committee believes that maintaining a restrictive monetary policy is necessary to stabilize inflation at the target, but the time for easing is approaching," Bache noted.
The policy board noticed that the Norwegian economy is performing better than previously anticipated, while inflationary pressures appear to be less intense than assumed earlier.
The bank also forecasts a gradual decrease in the policy rate starting from the first quarter of 2025, with inflation expected to be slightly above 2 percent by the end of 2027.
Additionally, the policy board highlighted significant uncertainty regarding the outlook for both the global and Norwegian economies, including the potential rise in international trade barriers.
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