BRUSSELS (MNI) – Norway’s central bank is likely on Wednesday to
leave its key policy rate at 2% for a fourth-straight meeting and will
probably leave its outlook unchanged as well, economists said.

The Norges Bank is currently in a tightening cycle, raising the key
policy rate back to a “normal level” after slashing it to 1.25% in 2009
to stave off the impact of the global financial crisis. But after
raising the rate to 2% in May, worries about the recovery of the global
economy prompted the central bank to keep it on hold at its June and
August meetings.

Analysts and economists see the next hike coming at the end of this
year or early next year, with the central bank due to update its rate
forecast path and economic projections on October 27.

“Developments domestically and abroad since the August meeting do
not prompt a change to this strategy at this point; macroeconomic data
releases have broadly been in line with the Bank’s forecasts, the
Norwegian krone has, so far, moved in line with expectations for the
third quarter and global interest rate expectations are around the
levels prevailing at the August meeting,” said Tina Mortensen, an
economist at Citigroup.

Since the last monetary policy meeting, Norway’s core inflation was
revealed to be 1.4% in August, in line with market expectations but well
below the Norges Bank’s 2.5% target.

“Domestic indicators released since the August meeting confirm
Norges Bank’s expectations for accelerating and more broadly-based
growth,” Erica Blomgren, an economist at SEB in Stockholm, said.

“The bank’s assessment shouldn’t have changed much since the
previous meeting, and the statement is likely to generally be a “copy
paste” of the previous one,” she added.

SEB said it doesn’t expect much market reaction to the Norges Bank
statement, but said a hawkish statement is likely to provoke the biggest
reaction from traders expecting a benign release.

–Brussels: 0032 487 (0) 32 803 665, echarlton@marketnews.com

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