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Norway Central Bank Unexpectedly Trims Rate By 25 Bps
(RTTNews) - Norges Bank cut its interest rate unexpectedly for the first time in five years as inflation eased somewhat faster than expected and signaled further reduction in policy rate if the economy evolves as estimated.
The Monetary Policy and Financial Stability Committee of Norges Bank unanimously decided to cut the policy rate to 4.25 percent from 4.50 percent.
The bank was widely expected to keep the rate unchanged at 4.50 percent. The interest rate has been at 4.50 percent since December 2023.
"The economic outlook is uncertain, but if the economy evolves broadly as currently projected, the policy rate will be reduced further in the course of 2025," the bank said.
Governor Ida Wolden Bache said, "A cautious normalisation of the policy rate will pave the way for inflation to return to target without restricting the economy more than necessary."
The committee observed that the tightening of policy since December 2023 contributed to cooling down the economy and to dampen inflation.
The committee noted that inflation declined since the policy meeting in March and the outlook for inflation for the coming year suggests lower inflation than previously expected.
"The uncertainty surrounding the economic outlook is now greater than normal," the governor said.
"If the economy takes a different path than currently envisaged, the policy rate path may be adjusted," Bache added.
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