Norway's central bank holds interest rates steady

19th Sep 2024 09:50

(Sharecast News) - Norway's central bank kept interest rates unchanged at a 16-year high of 4.5% on Thursday but said it intends to launch a rate cutting programme during the first quarter of 2025.

"The committee judges that a restrictive monetary policy is still needed to bring inflation down to target within a reasonable time horizon," said Norges Bank. "The policy rate forecast in this report implies that the policy rate will remain at 4.5% to the end of 2024 before being gradually reduced from the first quarter of 2025."

Back in June, Norges Bank pushed out expectations for an easing in interest rate policy until early 2025 from September and in August told Norwegians that rates would stay at their current level "for some time ahead".

However, Capital Economics' Andrew Kenningham said: "We think policymakers will begin cutting rates a little sooner and have pencilled in a first cut in December. After all, the unemployment rate has crept up and the share of firms reporting labour shortages has fallen. And measured on a comparable basis, core inflation is lower in Norway than in the euro-zone or UK."

He also thinks Norges Bank will cut rates "somewhat faster" than suggested by its projections next year.

Reporting by Iain Gilbert at Sharecast.com