MNI NORGES WATCH: Policy Held In May, Guidance Kept

Norges Bank left its policy rate and guidance unchanged on Thursday, saying that disruption caused by U.S. trade policy was likely to lower economic activity and lead to easier monetary policy among Norway’s trading partners but that greater-than-expected krone weakness provided at least a partial offset.

The Norwegian central bank's Monetary Policy and Financial Stability Committee repeated its line that the policy rate "will most likely be reduced in the course of 2025" from the current 4.5%, without adding any more precision as to the likely timing.

Norges Bank, unlike its peers, has yet to ease policy in this cycle as it has wrestled with persistently above-target inflation.

The committee stated that "a restrictive monetary policy is still needed to bring inflation down to target within a reasonable time horizon," although with the policy rate well above its estimate of the neutral rate, which it judges to be zero-to-1% in real terms. Deputy Governor Pal Longva warned that premature easing could feed through to rapid price increases, the statement said.

The Norwegian central bank stressed that policy uncertainty was higher than normal and that it would look in more depth at the outlook in June, when it carries out its next quarterly forecast round.