Norges Bank decided on Thursday to keep its key policy rate unchanged at 4.5%, maintaining a restrictive stance to combat persistently high inflation. The central bank's Monetary Policy and Financial Stability Committee said the rate will likely be reduced later in 2025.
"Inflation has picked up and been markedly higher than expected," said Governor Ida Wolden Bache, warning that a premature rate cut could trigger faster price growth. The policy rate, unchanged since December 2023, has helped cool economic activity and slow inflation, though wage growth and rising business costs remain concerns.
The central bank's updated forecast sees the rate easing to 4% by year-end, with further gradual reductions over the next few years. Norges Bank acknowledged high uncertainty and said any shift in inflation or unemployment trends could accelerate or delay rate changes.
