2024.01.2509:09:00UTC+00Norway Keeps Interest Rate On Hold

Norway's central bank left its key interest rate unchanged on Thursday and signaled that the rate is likely to be kept at the current level for some time ahead.

The Monetary Policy and Financial Stability Committee of the Norges Bank unanimously decided to maintain the policy rate at 4.50 percent.

"Based on the Committee's current assessment of the outlook and the balance of risks, the policy rate will likely be kept at that level for some time ahead," the bank said.

The policy rate is sufficiently high to return inflation to target within a reasonable time horizon, said Governor Ida Wolden Bache. The policy is having a tightening effect and the economy is cooling down.

Policymakers noted that the rise in business costs, high wage growth and the krone depreciation through 2023 is set to restrain disinflation. Accordingly, the policy needs to be tight for some time ahead.

"When inflation falls back and economic conditions so warrant, the Committee can start lowering the policy rate", the bank said.

Capital Economics' economist Jack Allen-Reynolds said the bank is set to stand pat for the next few meetings as policymakers wait to see a clear and consistent downward trend in core inflation.

The economist said he pencilled in the first cut for May, but the risks are skewed towards a later move.