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Norway Central Bank Holds Key Rate Steady After September Hike

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Norway's central bank left its key interest rate unchanged on Thursday after hiking it for the first time since 2011 in September.

The Executive Board kept the key policy rate unchanged at 0.75 percent, the Norges Bank said in a statement. The decision was in line with economists' expectations.

In September, the interest rate was hiked by a quarter basis points and the bank signaled that a further increase was likely in the first quarter of next year. The bank reiterated the guidance on Thursday.

"The outlook and balance of risks imply a gradual increase in the key policy rate," the bank said in its statement.

"Economic growth has been a little lower and inflation somewhat higher than projected, but the outlook and the balance of risks do not appear to have changed substantially since the September Report."

ING economist Jonas Goltermann expects the bank to hike the policy rate in March, given the Norges Bank's preference to move policy at meetings where they have new forecasts and a press conference.

"The key question remains what could cause them to shift from the current plan to raise rates on average twice per year," the economist reckoned.

The risks are likely skewed towards the upside, with the possibility of two hikes in the second half of 2019 in addition to the Q1 hike, Goltermann said.

"But the recent sharp drop in the oil price and indications that the Eurozone and Sweden - key trading partners for Norway, are slowing down have reduced the chance of a more aggressive tightening path," he added.

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