Norway's Central Bank Holds Firm Amid Economic Shifts

Norway's central bank maintained its interest rate at 4.50%, meeting analyst expectations. It plans to reduce rates starting March 2024, aligning with other Western banks. Concerns over international trade barriers emerged, while inflation figures stirred debates over future monetary policies.

Norway's central bank kept its policy interest rate steady at a 17-year high of 4.50% on Thursday, aligning with analyst predictions from a Reuters poll. The bank reiterated its intention to commence interest rate cuts in March, amid expectations for monetary policies to echo those of other Western banks in 2024.

Governor Ida Wolden Bache of Norges Bank confirmed plans for a rate reduction in March, marking the first such move since May 2020. The central bank previously indicated intentions to lower rates three times in 2025, reaching 3.75% by the year's close. The Norwegian crown saw a minor dip to 11.75 against the euro following the announcement.

Central bankers in Norway voiced concerns over potential rises in international trade barriers, citing possible negative impacts on global growth and uncertain effects on domestic price forecasts. Inflation dipped to 2.7% year-on-year in December, below expectations, yet above the bank's target. The rapid increase in business costs could drive inflation upwards, influencing future monetary policy decisions.

(With inputs from agencies.)