MNI BRIEF: Norges Bank Holds, Sees Two Cuts During 2025

Norges Bank lett its policy rate on hold at 4.5% at its March meeting, despite having previously signalled a cut, and shifted its guidance to simply state that the policy rate will most likely be lowered "in the course of 2025."

Governor Ida Wolden Bache cited the recent, higher than expected rise in inflation as a key factor behind the decision not to lower the policy rate. The rate projection suggests that there could be two cuts this year, as it is compatible with 4.0% by year end, with futher gentle easing after that, with the policy rate shown at 3.2% in 2027 and at 3.0% in 2028. (see MNI NORGES WATCH: Previously Clear March Cut In The Balance )

"If the policy rate is lowered prematurely prices may continue to rise rapidly," Wolden Bache stated.

Inflation on the target CPI-ATE measure was shown holding above target throughout the forecast, with the 2025 projection raised bu 0.7 percentage point to 3.4% and the 2026 one up 0.2 points to 2.9%, with CPI-ATE at 2.1% in 2028.