NEWS

OSLO, Dec 8 (Reuters) – Norway’s central bank will leave its key interest rate unchanged next week at a record low of 0% as the COVID-19 pandemic continues to hamper the economy, a Reuters poll of economists forecast on Tuesday.

The 23 participants in the poll were unanimous in predicting no change to the policy rate when the outcome is announced on Dec. 17.

Norges Bank has cut rates three times this year and said last month it planned to keep rates on hold until the economy showed clear signs of revival from the pandemic.

The policy committee is due to update forecasts for the economy and future rates next week, with economists on average pencilling in a policy hike in the second quarter of 2022.

That would be an earlier hike than the central bank’s own prediction so far of a hike in late 2022.

“Uplifting vaccine news gives hope for a faster normalization of the Norwegian economy than previously thought,” Nordea Markets said in a note to clients.

“With a normalization of the economy six months earlier than expected, it is reasonable to assume that the first rate hike will also be expedited by six months … In that case, we could see the first rate hike in Norway during the first quarter of 2022,” Nordea said.

A boom in house prices, driven by record low mortgage rates, was also a factor likely to bring a policy tightening closer, economists said. 

View the article