In their decision in Oslo published Thursday, officials concerned about the weak krone kept the interest rate at 4.5 percent, its highest level since December 2008, and said there was little chance of easing before the first quarter of 2025.
Following the Federal Reserve’s decision on Wednesday to begin easing monetary policy by cutting interest rates by half a percentage point, Norges Bank’s steadfast stance stands in contrast to peers who are easing the reins on their economies as the global inflation shock fades.
The Central Bank said in a statement that the committee believes that restrictive monetary policy remains necessary to return inflation to the target within a reasonable time horizon.
“The policy rate is likely to remain at 4.5 percent until the end of the year. We believe that the policy rate needs to be kept at its current level for some time to come but the time for easing monetary policy is approaching,” Ida Wolden-Baasche, governor of the Norwegian central bank, said in a statement on Thursday.
Economists are divided over when the Norwegian central bank will start easing monetary policy, with a majority of those polled by Reuters expecting a rate cut in December this year, while a minority pointed to March 2025 as the most likely time.
Expectations that the Norwegian central bank will be slower than its peers in normalizing policy boosted the krone, which rose about 1 percent to its strongest level against the euro in nearly three weeks.
But the krone is the worst performing G10 currency this year, down more than 3 percent against the dollar and about 4 percent against the euro, due to a sharp drop in demand for riskier assets in August alongside lower oil prices.
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