Norway's central bank kept its policy rate at 4.5% after its Nov. 4 meeting, citing inflation above target and saying it could raise rates again if the outlook warranted a move.
Norges Bank announced the decision Thursday, Nov. 5. September's 12-month consumer price index (CPI) inflation was 3.4%. The CPI adjusted for tax changes and excluding energy products (CPI-ATE) rose 3.0%, against the bank's 2% target. Governor Ida Wolden Bache said, “Inflation is too high.” She said the bank expected to keep the policy rate elevated for a period.
The bank also said earlier business-cost growth could prolong elevated inflation, while capacity use had slipped slightly below normal. Its June committee had signaled that an increase might be needed at a forthcoming meeting; Norges Bank raised the rate from 4.25% to 4.5% on Sept. 23. The decision follows earlier coverage of rate expectations ahead of the November meeting.
In its review of conditions since September, Norges Bank noted that oil spot prices were lower even as oil futures moved somewhat higher. Gas and electricity prices rose in both spot and futures markets. The bank also said the krone had appreciated to a level stronger than it had assumed.
Before the decision, FXStreet reported market uncertainty about a possible December increase. Commerzbank analyst Antje Praefcke said a stronger signal on tightening could support the krone and that energy prices remained its main influence. Her comments were predecision analysis, not guidance from Norges Bank.
Statistics Norway is scheduled to release its next consumer-price update on Nov. 10. Norges Bank's next rate decision is due Dec. 17, with new forecasts and Monetary Policy Report 4/26. The bank issued no updated forecasts with its November decision.
