Norges Bank Holds Key Rate at 4.5%, First Cut Expected at Beginning of 2025

By Dominic Chopping

Norway's central bank held its key policy rate at 4.5%, a level that is expected to remain unchanged until the end of the year as a weak krone continues to threaten efforts to bring inflation down.

The decision was in line with a Wall Street Journal poll.

The policy rate has been at 4.5% since December 2023 and has helped slow inflation significantly from its peak, but underlying inflation hasn't declined to the same extent, while a rapid rise in business costs and the krone's depreciation will likely restrain further disinflation, the bank said Thursday.

"We believe that there is a need to keep the policy rate at today's level for a period ahead but that the time to ease monetary policy is approaching," said Governor Ida Wolden Bache.

Norges Bank said its new forecast implies the policy rate will remain at 4.5% to the end of 2024 before being gradually reduced from the first quarter of 2025. The forecast is little changed from its previous forecast in June but the bank said it now expects a slightly faster decline in the policy rate through 2025, falling to 2.7% at the end of 2027.

Inflation is projected to approach 2% toward the end of 2027, it added.

Write to Dominic Chopping at dominic.chopping@wsj.com

(END) Dow Jones Newswires

September 19, 2024 04:43 ET (08:43 GMT)

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