Norway's Central Bank Halts Rate Cuts Amid Inflation Surge

Norway's central bank maintained its interest rates at a 17-year high of 4.50%, postponing previously planned cuts due to a resurgence in inflation. Analysts had predicted the rate hold as core inflation rose above targets. The bank foresees rate reductions beginning in 2025.

Norway's central bank made a surprising decision to keep interest rates steady at a 17-year peak of 4.50%, defying its earlier plans for a reduction. This move comes as inflation unexpectedly climbed, a development that forced policymakers to reconsider their strategy.

Analysts had anticipated the central bank's reversal, citing February's jump in core inflation to 3.4% from January's 2.8%, far surpassing the 2% target. Norges Bank announced it might lower rates in 2025. The interest rate goal is now a drop to 4% by year's end, with gradual decreases following.

The Norwegian crown reacted positively, strengthening against the euro post-announcement. Governor Ida Wolden Bache emphasized caution, noting that premature rate cuts could spur rapid price increases. Norges Bank's current approach contrasts with other Western central banks, maintaining the highest benchmark rate since 2008.

(With inputs from agencies.)