Norway's Central Bank Holds Policy Rate Steady at 16-Year High

Norway's central bank has maintained its policy interest rate at 4.50%, a 16-year high, to address inflation concerns. Despite some easing of core inflation and currency fluctuations, the bank's monetary policy committee remains tight-lipped about future rate cuts, citing economic uncertainties. A potential rate cut is anticipated by year's end.

Norway's central bank maintained its policy interest rate at a 16-year high of 4.50% on Thursday, as expected by analysts in a Reuters poll, signaling a prolonged tight stance to combat inflation.

"Based on our current assessment of the outlook, the policy rate will likely be kept at the current level for some time ahead," stated Norges Bank Governor Ida Wolden Bache. The Norwegian crown initially weakened but later rebounded to 11.75 against the euro by 0847 GMT.

In June, Norges Bank's monetary policy committee postponed its forecast for a rate reduction to early 2025 due to above-target inflation and a weak currency. While core inflation dipped in July, price growth remains above the 2.0% target. Economists are split on the timing of a rate cut, with opinions ranging from late 2023 to 2025.