MNI: NORGES WATCH: No Hurry For Further Cut

Norges Bank left its policy rate on hold at 4.0% at its November meeting as widely expected, and stated it would not hurry to cut again as policy must remain restrictive.

"The job of tackling inflation has not been fully completed, and we are not in a hurry to reduce the policy rate," Governor Ida Wolden Bache said, though the Norwegian central bank’s guidance stated a cut would take place within a year if the economy evolves as expected.

The committee assessed that "no new information has come in that indicates a material change to the outlook for the Norwegian economy since September," and so "a restrictive monetary policy is still needed," Wolden Bache told a press conference. 

November is an interim meeting with no new forecasts, while the Bank's September forecast presented a rate path gently declining to 3.2% in three years. New forecasts will be published before the December meeting. (See MNI INTERVIEW: Norges Bank Head Tilts Against Precise Guidance)

"The outlook for the international economy remains highly uncertain," the economic assessment said, adding that available data show stronger-than-expected Q3 growth.

LOWER INFLATION

Inflation declined in September to 3.0% on the target CPI-ATE measure which excludes energy products, the economic assessment noted, adding that this was "slightly lower than expected." Although "the strong growth in business costs in recent years will likely restrain disinflation ahead ... lower wage growth is expected to push down inflation further out." 

More information about inflation and the drivers of inflation will become available before the December meeting, the economic assessment noted. 

"The outlook suggests that inflation will return to target without a large increase in unemployment," Wolden Bache said, adding that excessively tight monetary policy could restrain economic activity.

Still, "registered unemployment has been a little higher than expected" since the September report, the economic assessment noted, even as "the number of job vacancies indicates sustained demand” for labour.

"Our objectives stand firm. We will finish the job and ensure that inflation is brought all the way back to 2%," Wolden Bache said.