The Norwegian central bank’s decision this week to keep its policy rate unchanged reflects Norway’s still-high economic activity and tight labour market with low unemployment. The outlook was described as “more uncertain than normal,” though, and Norges Bank is widely expected to raise rates again in March.
The bank’s Financial Stability Committee unanimously opted against raising its national policy rate that now stands at 2.75 percent. It had raised rates several times in recent months but decided it’s now time for a pause: Even though inflation, which dipped to 5.9 percent earlier this month, is “markedly above the target” and consumer prices keep rising, there are signs energy rates and inflation will ease.
That “suggests a more gradual approach” to rate setting, especially given the current economic uncertainty. “The future policy rate path will depend on economic developments,” said Norges Bank Governor Ida Wolden Bache, nonetheless warning that “the policy rate will most likely be raised” at the committee’s next meeting in March.