Norway central bank leaves rates; plans hike in early 2019
Norway’s central bank left the cost of borrowing unchanged on Thursday, but confirmed plans to raise interest rates early in 2019.
Norges Bank’s executive board said that the country’s outlook and the balance of risks had not changed significantly since it last met in September.
But it also acknowledged that “economic growth has been a little lower and inflation somewhat higher than projected” and confirmed plans to raise rates early in 2019. The Bank, which increase rates from 0.5% to 0.75% in September, is targeting a rate of 1% by the end of 2019.
Analysts at TD Securities said: “Macroeconomic trends support a continued trend of rate hikes through next year, but some underlying signs of increasing household uncertainty will restrain too quick a pace of hikes.
“However, a sharp increase in inflation momentum in recent months, on top of accelerating GDP growth into the second half of 2018, should keep them on track for a hike in the first quarter of 2019.”
ING, which is expecting the next rate rise in March, said: “The key question remains what could cause them to shift from the current plan to raise rates on average twice per year.
“We continue to see the risks as skewed towards the upside, with the possibility of two hikes in the second half. But the recent sharp drop in the oil price and indications that the Eurozone and Sweden – key trading partners – are slowing down have reduced the chance of a more aggressive tightening path.”
The Norwegian kroner remained relatively flat following the Bank's statement, trading at 9.51 against the euro.