Norges Bank Raises Policy Rate to 4.50%, Signals Potential for Further Hikes

• Norges Bank hiked policy rate by 25bps to 4.50%.
• Central bank signals readiness for further hikes if inflation warrants.
• Rates expected to remain elevated for an extended period, with no cuts before 2024.

Norges Bank, Norway’s central bank, raised its key policy rate by 25 basis points to 4.50% on Thursday, aligning with some market expectations despite a split consensus. The decision aims to bring inflation back to its 2% target within a reasonable timeframe. Governor Ida Wolden Bache stated that the Committee is prepared to raise the policy rate further if needed, signaling that rates are likely to remain elevated for a time. Analysts noted the central bank’s updated policy rate path implies a significant chance of another hike over the next six months, with no rate cuts forecasted before 2024. While mainland growth is projected around 1% and unemployment is expected to edge higher, the bank prioritizes controlling persistent inflation.