Dow Today – POLL-Norway’s central bank to hold rates next week, raise in March
reuters://realtime/verb=Open/url=cpurl://apps.cp./Apps/cb-polls?RIC=NOINTR%3DECI poll data
Poll expects rate to stay at 0.5% at Jan. 20 meeting
Rate hike seen in March, with more to come
OSLO, Jan 14 (Reuters) – Norway’s central bank will keep its benchmark interest rate on hold next week at 0.5% while confirming plans for an increase in March, a Reuters poll showed on Friday.
Norges Bank last month raised the sight deposit rate for a second time in three months and said it aims to lift the benchmark rate at least three times in 2022, cementing its position as the most aggressive rate setter in the developed world.
The December hike came despite a surge in Omicron coronavirus infections, highlighting the central bank’s desire to touch the breaks on a rapidly growing economy.
Norwegian inflation has also accelerated, as in much of the world, with headline prices rising 5.3% year on year in December and the core component up 1.8%, exceeding the median forecast of 1.4% in a Reuters poll of analysts.
The overall development suggests the economy has so far weathered Omicron better than Norges Bank anticipated, Handelsbanken Capital Markets wrote on Jan. 12.
“As we see it, the case is strong for another move in March. We also believe that there is upside risk to Norges Bank’s rate path for 2022; meaning, it is now more likely that we will see four, and not three, rate hikes this year,” it said.
The Reuters poll, conducted Jan. 10-13, showed economists were unanimous in expecting rates to stay on hold when the monetary policy committee’s decision is announced on Jan. 20.
For the March decision, 19 of 21 analysts predicted a hike, while the remaining two expected no change. A majority of those polled pencilled in three quarter-point hikes this year, raising the rate to 1.25% in line with Norges Bank’s view.
Next week’s meeting of the monetary policy committee is an intermediate one, meaning Norges Bank will not provide detailed economic forecasts, but will instead give a written assessment on progress since December.
Updated forecasts are due for release in March.
(Reporting by Terje Solsvik; Polling by Sarupya Ganguly and Milounee Purohit in Bengaluru; Editing by Susan Fenton)
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