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Norway Monetary Policy November 2022

Norway: Norges Bank slows the pace of tightening in November

At its 2 November meeting, the Executive Board of Norges Bank unanimously voted to deliver a 25 basis point increase and bring the sight deposit rate to 2.50%–its highest level since February 2009. The move, which was priced in by markets, comes on the heels of Septembers 50 basis point increase and marks a slowdown in the pace of policy tightening.

The decision was driven by a stronger-than-anticipated increase in inflation, which continued to accelerate further above Norges Banks 2.0% target in September. Moreover, the labor market is tighter than the Bank had projected. However, some areas of the economy have started to slow down, and the Bank expects lower energy and freight prices to help cool inflation ahead. Norges Bank noted that the effects of its aggressive policy tightening are starting to reflect in the economy, allowing it to raise rates more gradually.

In terms of forward guidance, Norges Bank hinted the sight deposit rate will likely be raised again at its final monetary policy committee meeting of the year, scheduled for 15 December.

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