Norway Central Bank Keeps Rates on Hold, Eyes Hike
Officials said another increase is likely at a forthcoming meeting as core inflation climbed to 3.4% in May, above the 2% target.
- On Thursday, Norges Bank maintained its policy interest rate at 4.25%, reiterating plans to hike later this year to combat inflation in line with analyst expectations.
- Governor Ida Wolden Bache stated that inflation pressures are stronger than anticipated, as annual core inflation rose to 3.4% in May, moving further from the bank's 2% target.
- Traders in overnight swaps price in 27 basis points of tightening by the September meeting, while Danske Bank analyst Kristoffer Kjaer Lomholt said policymakers "clearly guide towards a third-quarter hike."
- In neighboring Sweden, the Riksbank opted to keep borrowing costs unchanged, and the Swiss National Bank also held rates steady on Thursday, highlighting Norway's hawkish stance.
- Norges Bank's numeric projections show average rates rising to 4.55% by the final quarter of 2026, though officials leave open the door for a December hike at 20% probability.
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Norway’s central bank keeps policy rate on hold at 4.25%
Norges Bank’s policy committee cut rates twice last year and signalled further cuts in 2026, but has since changed course as inflation has remained above 3%. (Reuters pic) OSLO: Norway’s central bank kept its policy interest rate on hold at 4.25% on Thursday but said inflation is too high and that borrowing costs will likely be raised later this year, in line with expectations in a Reuters poll of analysts. The Norwegian crown currency weakened …
There is probably a need to raise the interest rate again at one of the next meetings, according to the central bank.
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