“`html
Norges Bank holds key interest rate steady, signals potential cut in September” width=”980″ height=”441″>Norges Bank Maintains Interest Rate, Hints at September Reduction
sol.no
Oslo, Norway – In a decision announced today, June 20, 2024, Norges Bank, Norway’s central bank, has decided to hold it’s key policy rate steady at 4.5 percent. However, the bank indicated a growing likelihood of a rate cut in September, contingent on economic data and currency fluctuations.
Economists are now adjusting their forecasts, with many anticipating a reduction in the benchmark rate during the autumn months.Senior economist Kyrre Knudsen of DNB Markets estimates the probability of a rate reduction this Thursday,June 20th,to be just under ten percent.
Both Knudsen and fellow economist Harald Andreassen of Swedbank concur that a more probable timeframe for a rate adjustment is September. Andreassen specifically predicts two rate cuts – one in September and another in December – though he acknowledges this is dependent on the performance of the Norwegian krone (NOK) against other major currencies.
“I’m betting on a cut in September and one in December,” Andreassen stated, emphasizing the krone’s exchange rate as a key influencing factor. the NOK has experienced volatility in recent weeks, impacting inflation and monetary policy considerations.
Context: Norway’s Economic landscape
norges Bank’s monetary policy is primarily focused on maintaining price stability, defined as an annual inflation rate of 2 percent over time. The bank utilizes the policy rate as its primary tool to achieve this goal. Recent inflation figures in Norway have shown a moderating trend, but remain above the 2 percent target. The Norwegian economy is heavily influenced by its oil and gas sector, and also global economic conditions.
The current account surplus, driven by oil and gas exports, provides a buffer against external shocks. Though, the bank is closely monitoring developments in the global economy, including the potential impact of geopolitical tensions and rising interest rates in other major economies.
