FX.co ★ Norway Holds Rate Unchanged as Expected

The Norges Bank opted to maintain its key policy rate at 4.5% during its May 2025 meeting, sustaining this 15-year high for over a year. This decision was in line with market expectations and previous indications from the central bank. Similar to other monetary authorities managing G10 currencies, the Norges Bank emphasized that trade barriers imposed by the United States and other major economies contribute to uncertainty within the global macroeconomic landscape. The Bank's Committee observed that, although inflation has decelerated from the elevated levels observed since 2023, it remains above target. Premature reductions in rates could risk a resurgence in price growth, given the uncertain economic outlook. Nevertheless, the central bank indicated that commencing a rate-cutting cycle later in the year may be appropriate. However, this guidance could change if an escalation in trade wars induces shocks to the Norwegian economy.