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2025-12-18 20:08:43
[The Norwegian central bank maintains its policy rate at 4.0%, as widely expected, on Thursday.] 2. The central bank stated that despite inflation exceeding its target, it anticipates one or two rate cuts over the next year. 3. The central bank governor noted at a press conference that if the economy develops broadly as currently expected, the policy rate will be further reduced over the next year. 4. However, the central bank explicitly stated that it is in no hurry to cut rates and emphasized that its interest rate outlook has remained largely unchanged since the September report. 5. The latest interest rate forecasts indicate that there may be three to four rate cuts over the next three years, meaning the policy rate could fall to 3% by the end of 2028. 6. The central bank stressed that maintaining a restrictive policy is necessary to reduce inflation, facing a trade-off between quickly bringing inflation back to target and avoiding an undue rise in unemployment. 7. According to its forecasts, through cautious policy normalization, inflation will gradually fall to the target level by 2028 without at the expense of a significant increase in unemployment. (8) The Norwegian krone strengthened after the interest rate decision was announced, reflecting the market's perception that the stance was more hawkish than expected. (9) Data released last week showed that Norway's core inflation slowed to 3.0% year-on-year in November, but remained above the official target of 2.0%. (10) A central bank business survey showed that Norwegian companies' capacity utilization rates have recently declined, and business leaders expect growth to slow in early 2026.
