Norway rates seen on hold this week as autumn cut beckons: Reuters Poll

Reuters

Published Apr 30, 2024 13:14

OSLO (Reuters) - Norway's central bank will keep its key policy interest rate unchanged this week, according to all 30 economists in a Reuters poll, but it remains on track to cut the cost of borrowing later in the year.

Norges Bank said in March it planned to cut rates this year from a 16-year high of 4.50%, with the reduction in borrowing costs most likely to begin in September.

The Norwegian currency has since depreciated to trade at a weaker level than expected by the central bank, which could stoke inflation and affect the timing of rate policy changes.

On an import-weighted index basis, the crown (NOK) on Tuesday traded at its weakest level since mid-December, some 3% below Norges Bank's full-year projection.

Norway's core inflation rate stood at 4.5% year-on-year in March, a 20-month low, down from a record 7.0% last June but still exceeding the central bank's goal of 2.0%.

"Since the March meeting a weak NOK, higher rates abroad, and slightly higher domestic capacity utilisation more than offset the lower inflation figures," DNB Markets said in a note to clients.

"We expect Norges Bank to reiterate the guidance from March but possible downplay the guiding for a September cut," it added.

The ECB and the U.S. Federal Reserve are both expected to cut rates in coming months.