Norway’s central bank is expected to raise its key policy rate on Thursday after inflation matched forecasts last month. Chief economist Harald Magnus Andreassen confirmed the consumer price index held steady at 4.4 percent in August, aligning with Norges Bank’s projections. The decision comes as households face rising borrowing costs, with mortgage rates already climbing above 5 percent for many borrowers.
Andreassen, who leads SpareBank 1 Markets’ economic team, said the inflation print leaves little room for the bank to delay tightening. Analysts now see a 60 percent chance of a quarter-point increase to 4.5 percent, up from the current 4.25 percent. Banks including DNB and Nordea have already adjusted their variable mortgage rates higher, signaling broader pressure on household budgets.
The bank’s previous guidance had warned of a potential hike if inflation remained stubborn. With energy prices stabilizing and core inflation excluding energy and food at 3.2 percent, policymakers have limited justification to hold rates steady. Finance Minister Trygve Slagsvold Vedum declined to comment on the decision, citing central bank independence.
Markets are pricing in two more quarter-point hikes by year-end, which would push the key rate to 5 percent. Such a path would mark the most aggressive tightening cycle since 2008, when rates peaked at 6 percent. Homeowners with loans exceeding 2 million kroner will see annual interest costs rise by up to 40,000 kroner under the highest scenario.
Norges Bank’s next policy meeting is scheduled for October 24. Traders will scrutinize the accompanying statement for clues on whether the bank signals a pause or foreshadows further increases in 2025.
Source: e24.no