The Norwegian central bank raised its policy rate for the third time this year, as underlying inflation moved close to the target, with analysts penciling in another rate hike in 2020.
Norges Bank increased the rate by 0.25 percentage points to 1.50%, effective Sept. 20, citing solid economic growth and above-normal capacity utilization. A number of central banks around the world eased their monetary policies in wake of the U.S. Federal Reserve's widely expected rate cut announced Sept. 18.
A higher rate will also mitigate the risk of a renewed acceleration in debt growth and house price inflation, said the central bank, which adjusted the rate path down in the backdrop of weaker growth prospects and lower interest rates abroad. A weaker-than-expected Norwegian kronor, however, pulled up the path.
"[The] current assessment of the outlook and balance of risks suggests that the policy rate will most likely remain at this level in the coming period," central bank Governor Øystein Olsen said.
Nordea Markets Chief Analyst Erik Johannes Bruce believes the central bank could hike rates again in 2020 if the domestic economy continues to top estimates and global uncertainties reduce.
James Smith, developed markets economist at ING, also predicts a hike in 2020, in the second quarter.
The Norwegian krone, which appreciated 0.5% against the dollar as of 4:44 a.m. ET, was little changed as of 5:44 a.m. ET.
