OSLO, June 19 (Xinhua) -- Norway's central bank on Thursday cut its key interest rate from 4.5 percent to 4.25 percent, citing easing inflation and increased economic stability.
The decision, made by Norges Bank's Monetary Policy and Financial Stability Committee during its Wednesday meeting, reflects expectations of further rate reductions in 2025 if current economic trends continue, the bank said in a press release.
Since December 2023, the policy rate had held steady at 4.5 percent following a prolonged tightening phase aimed at curbing high inflation. That cycle helped moderate economic activity and relieve price pressures, although inflation still exceeds the central bank's 2 percent target.
Norges Bank noted that inflation has declined since March and is now projected to be lower than previously anticipated for the coming year. A cautious normalization of interest rates is expected to support a return to target inflation without placing undue strain on the broader economy.
While monetary policy remains restrictive, current conditions allow for gradual easing. The bank's latest projections suggest the rate will fall just below 4 percent by the end of 2025 and decline further to around 3 percent by late 2028.
The bank's next policy rate decision is scheduled for Aug. 14.
