OSLO (Reuters) – Norway’s central bank is expected to keep its key interest rate at a record low zero percent this week, a Reuters poll found on Monday, leaving many economists to focus on any potential shift in the policy outlook.
The 33 participants in the poll were unanimous in predicting no change in rates when the outcome is announced on Sept. 24, in line with the central bank’s stated view.
Fearing a collapse of the economy amid the coronavirus outbreak, Norges Bank slashed its policy rate three times this year from 1.5% to zero, and said in May that rates could stay at that level until the end of 2023.
But only a few weeks later, in June, the central bank lifted its outlook for growth and said a rate hike could come in 2022 instead, and some economists now say the monetary policy committee may again alter its forecast.
“We think that the Norges Bank will bring forward the projected start date of policy tightening … from mid-2022 at present perhaps to mid-2021,” Capital Economics wrote on Sept. 17.
This could make Norges Bank among the first in the world to tighten policy after the coronavirus outbreak, Capital Economics noted.
Statistics Norway also recently said it expected rates to begin rising in mid-2021, albeit at a slow pace, as the impact on the economy from the COVID-19 pandemic was somewhat less severe than first thought.
DNB Markets predicted, however, that Norges Bank would stick to its 2022 plan, as set out in June, amid a recent rise in coronavirus infections.
Norges Bank is likely, however, to express concern about the fact that inflation is running above target and that housing prices are rising faster than expected, economists said.
(Polling by Sarmista Sen in Bengaluru, writing by Terje Solsvik in Oslo, editing by Ed Osmond)