Norway Holds Policy Rate Steady at 16-Year High

Norway's central bank, Norges Bank, kept its policy interest rate unchanged at 4.50%, the highest in 16 years, despite expectations of a rate cut later this year. The bank cited the need for restrictive monetary policy to achieve inflation targets. The Norwegian crown strengthened against the euro post-announcement.

Norway's central bank, Norges Bank, held its policy interest rate steady at a 16-year high of 4.50%, a move widely anticipated by economists, who now predict rate cuts might begin next year. The bank emphasized that maintaining a restrictive monetary policy remains essential to bring down inflation.

Opinions among economists were divided on the timing of potential rate cuts, with some projecting a decrease by December 2024 and others pointing to March 2025. The Norges Bank reaffirmed that rates would hold at 4.5% until the end of 2024, with gradual reductions expected to begin in 2025.

Following the decision, the Norwegian crown appreciated to 11.66 against the euro. This decision contrasts sharply with recent policy shifts from central banks like the U.S. Federal Reserve, which recently cut rates. Norges Bank continues to walk a tightrope, balancing high inflation and a cooling economy with low growth predictions.

(With inputs from agencies.)