Norway rates to stay on hold for now, first cut seen in 2025
OSLO, Nov 4 (Reuters) -Norway's central bank is expected to keep its policy interest rate at a 16-year high this week as it battles above-target inflation and currency weakness, a Reuters poll of analysts showed on Monday.
The Norwegian policy contrasts with that of other Western central banks, including the European Central Bank, the U.S. Federal Reserve, the Bank of England and Sweden's Riksbank, which have all begun cutting rates this year, some of them multiple times.
Norges Bank in September maintained a borrowing cost of 4.50%, the highest level since 2008, as predicted by economists, and said any cuts must wait until the first quarter of 2025.
The 28 participants polled by Reuters from Oct. 31 to Nov. 4 unanimously predicted that the central bank would again decide on Thursday to keep rates on hold.
A majority of economists predicted the Norwegian central bank would cut rates four times by end-September 2025, each by a quarter percentage point, reducing the policy rate to 3.50%.
Inflation has been slightly lower than expected since September but the Norwegian currency has also been weaker, causing potential upward pressure on consumer prices while market interest rates have risen, economists said.
The Nordic country's core inflation eased in September to 3.1% year-on-year, continuing a decline from a peak of 7.0% in June 2023 but still above the central bank's official 2.0% target.
"In sum, the deviation from the September report is too small for Norges Bank to give any new signals," Nordea Markets said in a note to clients.
There is no reason to expect changes to the policy rate at this week's meeting, DNB Markets said.
"Most likely, Norges Bank will reiterate signals from September... We still forecast a rate cut in March 2025," DNB added.
Reporting by Terje Solsvik; Polling by Purujit Arun in Bengaluru
Editing by Gareth Jones
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