Norway's central bank held its policy interest rate unchanged at a 17-year high of 4.50% on Thursday, as unanimously expected by analysts in a Reuters poll, and maintained plans to start cutting borrowing costs in March.
Economists expect Norway's monetary policy to start catching up this year with that of other Western central banks, most of which began cutting rates in 2024 as growth slowed and inflation waned.
"The policy rate will likely be reduced in March," Norges Bank Governor Ida Wolden Bache said in a statement.
It would be Norges Bank's first interest rate cut since May 2020.
The central bank last month said it planned to cut rates three times in 2025 to 3.75% by year-end. It is due to release a revised forecast in March.
The Norwegian crown had weakened slightly to 11.75 against the euro by 0914 GMT, from 11.74 just before the announcement.
In their discussions, Norwegian central bankers expressed concern about the risk of an increase in international trade barriers.
"Higher tariffs will likely dampen global growth, but the implications for price prospects in Norway are uncertain," the bank said in the statement.
All but one of the 25 analysts in the Reuters Jan. 13-20 poll predicted that a quarter-percentage point rate cut to 4.25% will be announced in March, while a single participant anticipated a 50 basis point cut to 4.00%.
The decision and outlook for a March rate cut were as expected, said Oeystein Doerum, chief economist at the Confederation of Norwegian Businesses (NHO).
"Therefore the attention at the March rate meeting will first and foremost be about the rate path and the further developments in rates," he said in an emailed statement.
The central bank said a restrictive monetary policy was still needed to stabilise inflation around its target, but reiterated that the time to begin easing monetary policy was soon approaching.
Core inflation in the Nordic country eased more than economists had expected in December to 2.7% year on year from 3.0% in November, but remains above the central bank's 2% target.
"Overall consumer price inflation has been lower than expected. On the other hand, fewer policy rate cuts abroad are now expected than earlier," the central bank said.
"Inflation has moved closer to target, but the rapid rise in business costs is likely to contribute to stoking inflation ahead," it added.
