MNI NORGES WATCH: Holds, Sticks To Signalling March Rate Cut
MNI (LONDON) - Norges Bank said on Thursday that it has left its policy rate on hold at 4.5%, where it has been since December 2023, and stuck to the line that the first cut this cycle is most likely to come in March.
The Bank's January meeting was an interim one, with no fresh economic forecasts. The assessment of its Monetary Policy and Financial Stability Committee was that its December forecasts have largely held good, paving the way for a March cut.
While headline inflation has been a little softer than Norges Bank had predicted, underlying inflation and unemployment was about in line, its policy assessment stated. It noted that policy rate expectations abroad have risen since the December report and long-term sovereign yields have increased but that the rise in Norwegian rate expectations has been less pronounced.
The krone has been softer than anticipated and the committee noted uncertainty generated by U.S. trade policy under the Trump administration without pointing to a clear impact on inflation.
"The Committee was concerned about the risk of more extensive trade barriers internationally. Increased tariffs will likely dampen growth globally, but the consequences for the price outlook here at home are uncertain," it said.
It provided no fresh steer as to how all of this would play out for the Norwegian policy rate down the line, instead sticking to the near-term guidance that "the key policy rate will most likely be lowered in March."
There was little change in the krone exchange rate following the universally-expected decision.