Norges Bank kept its policy rate at 4.5% on Nov. 4 as inflation stayed above target, while an FXStreet report pointed to energy developments as a near-term risk for the Norwegian krone (NOK). The Monetary Policy and Financial Stability Committee left open another increase if inflation conditions make it necessary, while indicating that economic developments would inform later decisions. EconoTimes previously covered the rate hold and mixed energy-price signals.
Norges Bank reported 12-month consumer price inflation of 3.4% in September. CPI-ATE, which adjusts for tax changes and excludes energy products, was 3.0%. The bank’s inflation target is 2%. Norges Bank Gov. Ida Wolden Bache said, “Inflation is too high. It will likely be necessary to keep the policy rate elevated for a time.”
In September, the bank said inflation had remained above target for several years and that rapid business-cost increases could prolong price pressures. It had raised the policy rate from 4.25% to 4.5% on Sept. 23, before holding it steady in November.
Norges Bank’s account of market conditions since September showed different moves across energy products. Spot oil prices had fallen while oil futures edged higher; spot and futures prices for gas and electricity had risen. The bank also said the krone had strengthened beyond its previous assumption.
FXStreet reported that Commerzbank analyst Antje Praefcke expects Middle East-related energy developments to matter more for NOK trading in the coming weeks than policy surprises. Praefcke also considered another rate increase by year-end possible, with December one potential timing. Norges Bank’s statement did not set a date for another increase.
Norges Bank issued no new forecasts with its November decision. Its next rate decision, accompanied by fresh forecasts, is scheduled for Dec. 17.