This will be revealed during Friday’s interest rate meeting.
– The way we now assess the prospects, the interest rate will probably be kept at the current level for quite some time to come, says central bank governor Ida Wolden Bache.
The policy interest rate will remain unchanged at 4.5 percent. This has been the level since the last increase, which was made in December 2023.
High enough
The assessment is that this interest rate level is high enough to reduce price growth to a target level of two per cent within what Norges Bank refers to as a reasonable time.
They write that monetary policy seems to be tightening, and that there is low growth in the Norwegian economy. They also see that price growth is slowing down, but that it is still clearly above the target.
Economic activity is slightly higher than expected, and wage growth may be higher than forecast. At the same time, interest rate expectations have increased, and the krone is somewhat weaker than Norges Bank assumed.
Next meeting in June
Friday’s interest rate meeting was otherwise a so-called interim meeting. Here, the policy interest rate is set, but no further interest rate forecasts are given going forward.
The next interest rate meeting will be in June. Until then, work will be done to clarify more of the uncertainties in the economy, and prepare forecasts.
It is also not ruled out that there may be interest rate increases, if this is seen as necessary.
“Should it become necessary to raise the interest rate again to bring price growth down to the target within a reasonable time, the committee is prepared to do so.” write Norges Bank about the time until the next interest rate meeting.
They also underline that there may be an opening for an earlier interest rate cut if price inflation were to fall faster than expected.
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