MNI BRIEF: Norges Bank Hikes 25bps, Says Likely To Hike In Dec

Norges Bank decided unanimously to hike the policy rate by 25 basis points to 2.5 percent at its November meeting, having previously hiked 50bps in September.

The move shows Norges Bank's Monetary Policy and Financial Stability Committee, which was early to start its tightening cycle, moving ahead of other central bank in reducing the scale of hikes but its statement made clear that it was a close call. It referred to a "more gradual approach" to tightening but with inflation overshooting its projections and the labour market still tight this could have suggested "raising the policy rate by more than 0.25 percentage point" the statement said.

Analysts had been split over whether the Norwegian central bank would raise by 25 or 50 bps. The Committee said that "the policy rate will most likely be raised further in December" with its September projections showing the policy rate peaking at just over 3.0%, with two more 25 bps hikes on the cards, although the central bank will provide updated projections in its December Monetary Policy Report.

In its Monetary Policy Assessment Norges Bank said that economic activity had been higher than it expected in its September forecast round but that while inflation was also higher energy prices were coming in lower than expected and this, along with lower freight costs, may help to curb inflation ahead.