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Norway Monetary Policy March 2024

Norway: Norges Bank stays put in March, meeting expectations

At its 20 March meeting, the Executive Board of Norges Bank unanimously voted to hold fire again and leave the policy rate at a 16-year high of 4.50%, as it did had January. The hold had been priced in by markets—the Bank did not deviate from the previously announced policy path—and followed a cumulative 450 basis points of hikes since September 2021.

The decision was driven by the Bank’s assessment that the policy rate must remain elevated to bring “inflation back to target within a reasonable time horizon.” In particular, while having eased further through February, both headline and core inflation remain far above Norges Bank’s 2.0% target. Moreover, the Bank noted that upside pressures to inflation remain, namely a weak krona and robust wage growth.

Norges Bank’s forward policy guidance mirrored January’s tone and suggested it will once again hold fire when it convenes next on 2 May: The Bank stated that the policy rate will “likely be kept at that level for some time ahead.” That said, the Bank stands ready to either hike the rate further or begin cutting rates sooner, depending on changes to its baseline scenario. Over half of our panelists see the first cut in Q2, while the rest have penciled it in for Q3.

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