As expected, Norge’s Bank left policy unchanged this morning, with the key interest rate remaining at 0.5%. There were no new forecasts published at this meeting, and little news in the data since the previous meeting in September.
The Norwegian economy is still recovering from the 2014-15 oil price shock. Having nudged its interest rate forecast up slightly in June and September, the NB has tentatively started the tightening cycle, though a first rate hike is not forecast until mid-2019. If the domestic economy continues to recover and the major central banks deliver gradually tighter policy, we think the NB could end up bringing the first rate hike forward a little.