Norway leaves rates unchanged after inflation picks up

(Sharecast News) - Norway's central bank kept interest rates at a 17-year high on Thursday, as widely expected, following an uptick in inflation. Norges Bank had previously flagged that the first cut in the cost of borrowing for five years would likely come in March. That position was seemingly confirmed by governor Ida Wolden Bache in a speech last month.

However, the rate-setting monetary policy and financial stability committee instead opted to leave the cost of borrowing at 4.5%, following an unexpectedly sharp rise in inflation.

Core inflation reached 3.4% in February in Norway, prompting analysts to change their forecast for policy rate. As well as being notably higher than January's 2.8% print, it is also above the central bank's 2% inflation target.

In a statement, Wolden Bache said: "Inflation has picked up and been markedly higher than expected. If the policy rate is lowered prematurely, prices may continue to rise rapidly.

"Therefore, we decided to leave the policy rate unchanged now."

However, future cuts were not ruled out for later in the year.

In notes published alongside its decision, the committee said: "There is uncertainty about future economic developments, but the committee's current assessment of the outlook implies that the policy rate will most likely be reduced in the course of 2025."