Norway's central bank kept the rate at 4.5%, not ruling out a further increase

The rate remained at 4.5%

Norway's central bank (Norges Bank) kept its key rate unchanged at 4.5% on Thursday, signaling that a further increase remains possible. The decision of the interim meeting was in line with market expectations; no new economic forecasts or rate projections were prepared for it. This was reported by Anadolu.

Inflation is 'too high'

'Inflation is too high,' said the head of the regulator, Ida Wolden Bache. According to her, the rate will likely have to remain elevated for some time, and the bank is ready to raise it if necessary to bring inflation back to target. The decision came after September's quarter-percentage-point rate hike, when the bank deemed policy tightening necessary to return inflation to the 2% target within a reasonable time. At that time, the bank projected the target would be reached in 2029, with borrowing costs remaining near current levels before a slight decline.

What affects inflation

Although underlying inflation slowed more than expected over the summer, the regulator pointed to persistent domestic pressure on prices, including the effect of previously increased company labor costs. An additional complicating factor was the rise in energy and commodity prices amid the conflict in the Middle East, which raise business costs and the prices of imported goods. A countervailing factor is the strengthening of the Norwegian krone, which reduces imported inflation. The bank's September forecasts also assumed further cooling of the economy and a moderate rise in registered unemployment; policymakers emphasized the need to balance the fight against inflation with the risk of an overly sharp slowdown in business activity.