Poll: Norway's central bank to hold rates this week, hike in June
05/05/2026 09:54
Announcement due on May 7 Majority of economists predict unchanged rate of 4.0% Hike to 4.25% expected in June, 4.50% by year-end reuters://realtime/verb=Open/url=cpurl://apps.cp./Apps/cb-polls?RIC=NOINTR%3DECI poll data COPENHAGEN, May 5 (Reuters) - Norway's central bank is likely to keep its key interest rate at 4.0% this week before an expected hike in June to combat inflation pressure driven by strong wage growth and high energy costs, a Reuters poll of economists indicated on Tuesday. Norges Bank has said in recent months it plans to raise borrowing costs this year despite criticism from labour unions which say tighter monetary policy at this time could do more harm than good by driving up unemployment. A majority of respondents, 15 of the 23 economists in the April 29 to May 4 poll, said Norges Bank would keep the policy rate on hold on Thursday, while the remaining eight expected a 25-basis-point hike. All but three respondents expected rates to rise by the end of June, with a median prediction of 4.25%, while the forecast for the end of the year stood at 4.50%. A CLOSE CALL ON WHEN TO HIKE The policy committee cut rates twice last year and in December signalled further cuts in 2026, but has since changed course as inflation has remained stuck at around 3%, above the central bank's long-term target of 2%. Rates are set to rise, but it is a close call whether this will happen in May or June, brokers DNB Carnegie said. "If Norges Bank is already aiming for a higher policy rate, the question is why wait? Moreover, energy prices have remained elevated and have even moved higher since March," DNB wrote in a note to clients. On the other hand, Norway's currency has strengthened more than expected since March, dampening inflation from imports and potentially giving the central bank leeway to wait until June, DNB added. Handelsbanken said the arguments for a hike had strengthened since March, pointing to "broad-based and persistent" core inflation. "We believe a rate hike now is the right call, and market pricing has moved to assign a clear majority probability to a hike (on May 7)," the brokerage said in a note to clients. Australia's central bank on Tuesday raised rates for a third time this year, returning borrowing costs to post-pandemic highs and warning that inflation would remain sticky as the conflict in the Middle East triggered a global oil shock. (Other stories from the Reuters global economic poll) (Reporting by Louise Rasmussen. Polling by Debrah Gomes in Bengaluru. Editing by Terje Solsvik and Mark Potter) ((Louisebreusch.rasmussen@tr.com; +45 21 27 97 79;))