Norway rates seen on hold amid currency weakness
By Terje Solsvik
OSLO, Aug 12 (Reuters) -Norway's central bank is expected to keep its policy interest rate on hold this week at a 16-year high of 4.50% to combat inflation and prevent a further slide in the country's currency, economists in a Reuters poll unanimously predicted on Monday.
Norges Bank in June held rates unchanged and pushed back its prediction for an initial rate cut to 2025 from September, forecasting interest rates to drop by 75 basis points next year.
But economists remain divided over when Norges Bank might start easing monetary policy amid falling global inflation and a lowering of rates by other central banks, with some expecting a cut in the fourth quarter this year and others pointing to 2025.
A majority of participants in the Aug. 7-12 poll predicted a first rate cut by year-end and four more reductions in 2025 to end next year at 3.25%.
Markets are also pricing in an inaugural rate cut in the fourth quarter this year, brokers said.
The Nordic country's core inflation eased to a 27-month low of 3.3% year-on-year in July, below the central bank's own forecast of 3.7% and down from a peak of 7.0% in June of 2023 but still above the official 2.0% target.
Norway's crown currency NOK= has weakened since June, triggering concerns this could again stoke inflation by pushing up the cost of imports and thus limiting the central bank's room for monetary easing.
"We anticipate Norges Bank will keep the policy rate unchanged at 4.50% at the August policy meeting and reaffirm the guidance from June," brokers DNB Markets said in a note to clients.
Reporting by Terje Solsvik; Polling by Purujit Arun;
Editing by Alison Williams
Latest News
Disclaimer: The XM Group entities provide execution-only service and access to our Online Trading Facility, permitting a person to view and/or use the content available on or via the website, is not intended to change or expand on this, nor does it change or expand on this. Such access and use are always subject to: (i) Terms and Conditions; (ii) Risk Warnings; and (iii) Full Disclaimer. Such content is therefore provided as no more than general information. Particularly, please be aware that the contents of our Online Trading Facility are neither a solicitation, nor an offer to enter any transactions on the financial markets. Trading on any financial market involves a significant level of risk to your capital.
All material published on our Online Trading Facility is intended for educational/informational purposes only, and does not contain – nor should it be considered as containing – financial, investment tax or trading advice and recommendations; or a record of our trading prices; or an offer of, or solicitation for, a transaction in any financial instruments; or unsolicited financial promotions to you.
Any third-party content, as well as content prepared by XM, such as: opinions, news, research, analyses, prices and other information or links to third-party sites contained on this website are provided on an “as-is” basis, as general market commentary, and do not constitute investment advice. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, it would be considered as marketing communication under the relevant laws and regulations. Please ensure that you have read and understood our Notification on Non-Independent Investment. Research and Risk Warning concerning the foregoing information, which can be accessed here.
