Norges Bank unexpectedly hikes its Key Policy Rate to 4.50% from 4.25% (exp. a hold at 4.25%); The forecast indicates that the policy rate will lie around 4.5% until autumn 2024 before gradually moving down

The policy rate is likely close to the level required to return inflation to target within a reasonable time horizon.
Committee is concerned with balancing the risk of tightening too much against the risk of tightening too little. The economy is now cooling down, and the full effects of the past rate hikes have yet to be seen. On the other hand, inflation is high, and the krone depreciation makes it more challenging to bring down inflation.
Committee assesses that a tight monetary policy stance will likely be needed for some time ahead in order to return inflation to target within a reasonable time horizon. Further out, when inflation falls back and economic conditions so warrant, the Committee can start lowering the policy rate.
If cost inflation remains elevated or the krone turns out to be weaker than projected, price inflation may remain higher for longer than currently projected. In that case, the Committee is prepared to raise the policy rate again.
If there is a more pronounced slowdown in the Norwegian economy or inflation declines more rapidly, the policy rate may be lowered earlier than currently envisaged.

RATE PATH

2023: Q4-2023 4.30% (prev. 4.31%)
2024: Q1-2024 4.52% (prev. 4.44%), Q2-2024 4.55% (prev. 4.44%), Q3-2024 4.44% (prev. 4.41%), Q4-2024 4.29% (prev. 4.33%)
2025: Q1-2025 4.14% (4.22%), Q2-2025 3.97% (prev. 3.96%) Q3-2025 3.80% (prev. 3.96%) Q4-2025 3.60% (prev. 3.80%), end-2026 2.97% (prev. 3.20%)

INFLATION FORECASTS (CPI-ATE)

2023: Q4-2023 5.83% (prev. 5.91%)
2024: Q1-2024 5.43% (prev. 5.53%), Q2-2024 4.81% (prev. 4.75%), Q3-2024 4.65% (prev. 4.43%), Q4-2024 4.31% (prev. 4.14%),
2025: end-2025 3.08% (prev. 3.04%)
2026: end-2026 2.25% (prev. 2.37%)