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Norway Monetary Policy June 2024

Norway: Central Bank holds rates in June

At its meeting on 19 June, Norges Bank decided to keep the policy rate unchanged at a 16-year high of 4.50%. The decision was unanimous and had been priced in by markets.

The hold was driven by concerns about inflation running above Norges Bank’s 2.0% target. Although inflation has been slightly lower than projected and unemployment has increased as expected, improved business prospects and anticipated higher wage growth suggest that inflation may remain higher for longer than previously projected.

Norges Bank’s forward guidance indicates that if the economy evolves as currently envisaged, the policy rate will remain at 4.50% until the end of the year and then be gradually reduced. This is based on projections that inflation will decline further, approaching its 2.0% target by the end of 2027. However, the policy rate could be adjusted if economic conditions deviate from expectations. Indeed, virtually all of our panelists still see room for the rate to be lowered this year. The next policy meeting is scheduled for 14 August.

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