Norway's central bank opted to maintain its key interest rate unchanged on Thursday, aligning with widespread expectations. The bank reiterated its intention to potentially lower the rate in March, in response to surging business costs that could fuel inflation.
The Monetary Policy and Financial Stability Committee of Norges Bank resolved to keep the policy rate steady at 4.5 percent. This rate has been consistently held since December 2023.
The committee evaluated that a restrictive monetary stance remains necessary to stabilize inflation at target levels, although the period for moderating this policy is nearing.
Governor Ida Wolden Bache confirmed, "The policy rate will likely be reduced in March," marking what would be the first rate cut since May 2020.
Governor Bache noted that while inflation is nearing its target, escalating business costs could potentially accelerate inflation in the future.
Additionally, the committee acknowledged the uncertainty surrounding the effects of increased trade tariffs on Norway's price outlook.
According to Jack Allen-Reynolds, an economist at Capital Economics, the bank may initiate monetary easing slightly faster than current projections indicate. He projected that inflation trends would permit Norges Bank to act more swiftly, potentially implementing a 25 basis points cut each quarter until the policy rate reaches 3 percent by mid-2026.
