OSLO (Reuters) -Norway’s central financial institution stored rates of interest on maintain at 4.50% on Friday, as unanimously anticipated by analysts, and mentioned a decent financial coverage stance could also be wanted for considerably longer than deliberate to curb inflation.
The central financial institution mentioned in March that it may begin slicing charges in September from the present 16-year excessive.
The Norwegian crown strengthened to 11.74 towards the euro at 0901 GMT, from 11.77 simply earlier than the announcement.
There was no new forecast launched on Friday. The following coverage prediction is due on June 20.
Weak spot within the Norwegian forex, coupled with indicators of renewed inflation overseas, had led some analysts in latest weeks to foretell Norges Financial institution could ultimately postpone its deliberate reduce.
“The info to date may counsel {that a} tight financial coverage stance could also be wanted for considerably longer than beforehand envisaged,” Norges Financial institution mentioned in a press release.
The coverage committee reiterated that the present coverage fee of 4.5% was sufficiently excessive to return inflation to focus on inside an affordable time horizon.
The central financial institution assertion pointed to a stronger financial system, excessive wage progress and forex weak point, Sparebank 1 Chief Economist Elisabeth Holvik mentioned.
“In different phrases, there most likely will not be any fee reduce this yr,” Holvik mentioned in a word to purchasers.
Since its earlier coverage announcement in March, inflation has been barely decrease than projected whereas financial exercise and wage progress seem like barely greater, Norges Financial institution mentioned.
“On the similar time, rate of interest expectations overseas have risen and the crown is considerably weaker than assumed,” it added.
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Norway’s core inflation fee stood at 4.5% year-on-year in March, a 20-month low, down from a document 7.0% final June however nonetheless exceeding the central financial institution’s purpose of two.0%.
The U.S. Federal Reserve mentioned on Thursday it might take longer than anticipated to drive down inflation, which in flip may delay its deliberate fee cuts.
The European Central Financial institution is predicted to chop charges in June, in keeping with a latest Reuters ballot, after which twice extra later this yr, however this was lower than analysts had earlier forecast.
