The Norwegian central bank has decided to maintain its key policy rate at the current level of 4.25%. However, it confirms that an increase is likely to happen later this year. This decision comes after a series of rate hikes that occurred until September, with the full impact of the tighter monetary policy yet to be fully felt on the Norwegian economy.
As anticipated by economists, the decision to keep the rate steady was expected. In the assessment of the policy committee, the current rate is deemed close to the level necessary to combat inflation. This allows the committee more time to evaluate whether a further hike is necessary.
Despite these considerations, inflation remains high and has significant costs for society. For this reason, Governor Ida Wolden Bache stated that there is a likelihood of another rate increase at the next month’s meeting. The committee will have access to more information regarding the inflation outlook before making any decisions in December. If it becomes clear that underlying inflation is decreasing, the policy rate may be held steady.
The Norwegian central bank’s decision follows a trend among other central banks, including the US Federal Reserve and the European Central Bank, which have also paused their rate hikes as global inflation stabilizes and economic growth slows down. Similarly, it is expected that the Bank of England will maintain its key policy rate during its upcoming meeting.