MNI BRIEF: Norges Bank Hikes 25bps To 4.25%, Sees 4.5% Peak

Norges Bank hiked 25 basis points at its September meeting, raising the policy rate to 4.25%, and said that there was likely be one further hike, "most probably in December".

The 25 bps hike was widely expected but some analysts had expected the central bank to suggest that 4.25% was the peak, but instead the Monetary Policy and Financial Stability Committee raised its projected policy path and signalled that the policy rate is likely to reach 4.5% before holding around that level through 2024.

The detailed rate path showed the policy rate peaking at 4.44% in Q1 2024 and starting its descent in Q4 next year, ending up back down at 3.2% by Q4 2026. The peak in the previous path was 4.21% with the policy rate at 2.88% three years ahead.

The inflation forecasts were raised for 2024 on the CPI measure, to 4.8% in 2024, up 0.9 percentage point, but inflation on the the target CPI-ATE measure, which excludes energy prices measure, was raised only 0.1 point to 4.7% for 2024.