Norwegian Central Bank Holds Firm Amid Inflation Surge

Norway's central bank, Norges Bank, maintained its interest rate at 4.50%, a 17-year high. Previously anticipating a reduction, the decision reflects a response to a sudden rise in core inflation. Analysts had predicted this course reversal due to February's inflation spike, exceeding the 2% target.

Norway's central bank held its interest rates steady at a striking 17-year high of 4.50% on Thursday, reaffirming most analysts' forecasts. The unexpected inflation surge compelled policymakers to defer the anticipated rate cut.

Initially, Norges Bank had projected a potential 25-basis point rate reduction in March, with the governor hinting at an imminent rate cut last month. However, February's core inflation escalation to 3.4% from 2.8% in January, surpassing the 2% target, prompted the bank to hold firm.

In a Thursday statement, Norges Bank suggested that the policy rate might only decrease during 2025, reflecting the current assessment of economic conditions.

(With inputs from agencies.)