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2025-09-18 16:12:29
Norges Bank Cuts Interest Rate Another 25 Basis Points to 4.0%, Future Cuts May Slow Down. (1) The Norges Bank cut its key interest rate by 25 basis points to 4.0% on Thursday, its second rate cut in three months and in line with most analysts' expectations. However, it indicated that future rate cuts would be smaller than envisioned in June. (2) The Monetary Policy Committee considered keeping the interest rate unchanged but ultimately decided a rate cut would be more appropriate. (3) The central bank noted that economic data since June suggests limited domestic economic capacity and that inflation is likely to remain elevated for an extended period. (4) Governor Ida Walden-Bakke indicated that future rate cuts may not be as rapid as anticipated before the summer. (5) Following the announcement, the Norwegian krone rose slightly against the euro from 11.62 to 11.61. (6) The bank unexpectedly cut interest rates by 25 basis points to 4.25% in June, its first such cut in more than five years, and announced last month that it plans to cut again this year to address moderate price trends. 7. However, recent data showing a rebound in core inflation in August and stronger-than-expected economic growth in the first half of the year, coupled with a positive outlook for growth and investment from the central bank's business survey, have led some market participants to question the need for an immediate rate cut. 8. A Reuters poll conducted from September 10 to 15 showed that 23 of 30 economists expected a rate cut to 4.0%, while the remaining seven expected it to remain unchanged.
