Norges Bank keeps policy rate at 4.5%

Norges bank’s Monetary Policy and Financial Stability Committee decided to maintain the policy rate at 4.5 per cent during its September 18 meeting. Governor Ida Wolden Bache indicated the rate would likely stay at this level until the end of the year.

The policy rate, held steady since December 2023 after several hikes to combat inflation, has helped cool the Norwegian economy, with unemployment ticking up slightly.

While inflation has eased from its peak, underlying inflation remains stubborn, exacerbated by rising business costs and krone depreciation.

Norges Bank expects to begin reducing the policy rate in early 2025, with inflation projected to approach 2 per cent by late 2027.

However, the Committee noted uncertainty surrounding future economic conditions, suggesting the rate could be lowered sooner if inflation continues to fall or economic activity slows further. Conversely, if the krone depreciates more, additional rate hikes may be necessary.

Attribution: Norges Bank

Subediting: M. S. Salama