Norway’s central bank maintained its policy rate but signaled a potential September hike despite softer inflation data.
Norges Bank kept its policy rate unchanged at 4.25%, defying expectations of a hike after weaker summer inflation prints. The decision retained a tightening bias, though analysts noted the odds of a final September increase have narrowed.
Prior guidance had suggested a likely rate hike, but recent inflation data fell short of forecasts. The central bank’s statement acknowledged softer economic conditions while still projecting one more increase before pausing.
The Norwegian krone weakened following the announcement, reflecting reduced confidence in near-term tightening. Markets are now pricing a lower probability of a September hike compared to earlier expectations.