IonQ partners with Emergence Quantum to expand APAC presence
Investing.com -- Norges Bank, Norway’s central bank, has decided to hold off on a previously signaled rate cut.
The decision, which was announced this morning, was not unexpected. Along with this, the Bank also revised its interest rate projection upward.
Earlier this year, the bank had hinted at a rate cut, stating that it would likely be reduced in March. This was in line with statements from policymakers towards the end of last year, who suggested that a lower policy rate was on the horizon. However, recent economic data has led to a change in these plans.
The Regional Network Survey results indicate that the mainland economy is growing at a reasonable pace. Unemployment rates are lower than initially anticipated, and inflation data for February was stronger than expected. The bank also pointed out that wage growth has exceeded expectations, leading to a potential increase in inflation due to high business cost growth.
In light of these factors, Norges Bank revised its interest rate projection today. Despite this, the bank still anticipates a reduction in the policy rate during 2025. Policymakers believe that unemployment will increase and inflation will gradually decrease to reach the 2% target.
The bank’s new projection for this year aligns with forecasts that the policy rate will drop to 4% by December. The bank also predicts a further gradual decline in the following years.
Capital Economics, a macroeconomic research company, has forecasted two interest rate cuts this year, which would lower the policy rate from 4.5% to 4.0%. However, they believe that there is a risk that Norges Bank might keep the policy rate elevated for a longer period.
Capital Economics also noted that if economic growth accelerates and inflation remains high, there’s a possibility that even this year’s planned interest rate cuts could be cancelled.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.