OSLO (Reuters) -Norway’s central bank held its policy interest rate unchanged at a 16-year high of 4.50% on Thursday, as unanimously expected by analysts in a Reuters poll, and said it plans to start cutting borrowing costs in March next year.
“The committee judges that a restrictive monetary policy is still needed to stabilise inflation around target, but that the time to begin easing monetary policy is soon approaching,” Norges Bank Governor Ida Wolden Bache said in a statement.
“Based on the committee’s current assessment of the outlook, the policy rate will most likely be reduced in March 2025,” Norges Bank said.
The Norwegian crown weakened to 11.77 against the euro at 0938 GMT, from 11.76 just before the announcement.
The Norwegian monetary policy stance contrasts with other Western central banks, most of which started cutting rates already this year as growth slowed and inflation eased from the highs of recent years.
Norway’s economy has weathered relatively high interest rates, economists said, helped by rising business investments and wages, increased government spending and currency depreciation.
Norges Bank said the economy was holding up better than previously projected, while inflation pressures were more subdued. Still, the outlook was unclear, it added.
“There is substantial uncertainty about the outlook for both the global and Norwegian economy,” it said.
The 28 participants polled by Reuters from Dec. 11-16 had unanimously predicted the central bank would keep rates on hold on Thursday and almost all said it would start cutting in the first quarter of 2025.
The bank highlighted the risk of a trade war between the United States and China as one of the issues it discussed, saying it “was concerned with the risk of an increase in international trade barriers”.
“Higher tariffs will likely dampen global growth, but the implications for price prospects in Norway are uncertain,” the bank said.
The U.S. Federal Reserve on Wednesday cut rates by a quarter percentage point, as expected, but said more reductions hinge on further progress in lowering persistent inflation.
Norges Bank had said in September the policy rate would likely be kept unchanged to the end of the year before being gradually reduced from the first quarter of 2025 onwards.
The Nordic country’s core inflation accelerated in November to 3% year-on-year from 2.7% in October, above the central bank’s 2% target.
The Swedish central bank earlier on Thursday cut rates by 25 basis points, in line with expectations, and said it may again ease policy in the first half of 2025.
In Britain, the Bank of England is due to report the outcome of its latest rate meeting later on Thursday, with economists expecting an unchanged borrowing cost.
