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Norway Monetary Policy December 2022

Norway: Norges Bank meets expectations and delivers another 25 basis point increase in December

At its 14 December meeting, the Executive Board of Norges Bank unanimously voted to deliver another 25 basis point increase and bring the sight deposit rate to 2.75%—its highest level since January 2009. The move, which had been priced in by markets, came on the heels of Novembers same-size hike, when Norges Bank slowed its pace of tightening.

The decision was driven by inflation outpacing projections from the September monetary policy report. Additionally, Norges Bank assessed that price pressures will remain elevated for a longer period than expected. With regards to activity, the Norwegian economy is still robust, although the Bank noted it has started to slow down, providing room for smaller and more gradual rate increases. Additionally, the labor market has remained tight despite prior, more aggressive rate increases.

In terms of forward guidance, Norges Bank hinted that it will deliver more increases in Q1 2023. The majority of our panelists expect between 25–50 basis points worth of hikes in 2023.

The next scheduled meeting, and the first one of 2023, is scheduled for 18 January.

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