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Norway Monetary Policy March 2023

Norway: Norges Bank meets expectations and resumes tightening cycle in March

At its 22 March meeting, the Executive Board of Norges Bank unanimously voted to resume its tightening cycle and deliver a 25 basis point increase, bringing the sight deposit rate to 3.00%. The move, which has been largely prices in by markets, followed the hold in January’s meeting.

The decision was driven by the Bank’s assessment that a further rate increase was needed in order to continue fighting above-target inflation. Moreover, the Bank noted that while activity has started to cool, the economy remains robust: The labor market is tight and wage growth is rising.

In terms of forward guidance, Norges Bank surprised with its more hawkish tone. The Bank upwardly revised the forecast for the rate to 3.50% by the summer and hinted that rates will most likely be raised again at the next meeting, scheduled for 4 May. Our panelists are slightly more dovish: The Consensus is for rates to peak at 3.30% in the middle of the year.

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