Published by Global Banking & Finance Review®
Posted on March 10, 2025
2 min readLast updated: January 24, 2026
Add as preferred source on GoogleNorway's core inflation rose to 3.4% in February, exceeding expectations and casting doubt on Norges Bank's planned March rate cut.
COPENHAGEN (Reuters) -Norway's core inflation rate rose well above what analysts and the central bank had expected in February, data showed on Monday, sowing doubts about the central bank's plans to start cutting borrowing costs in March.
Core inflation, which strips out changing energy prices and tax, stood at 3.4% year on year, according to Statistics Norway (SSB) data, up from 2.8% in January and above the 2.9% expected by analysts in a Reuters poll.
The central bank had expected core inflation to ease to 2.7%.
"Norges Bank has a considerable inflation challenge," Handelsbanken said in a research note to clients, adding that price growth for imported goods, as well as domestically produced goods and services, was well above the central bank's forecasts.
Norway's currency, the crown, had strengthened to 11.73 against the euro by 0706 GMT, from 11.75 ahead of the data release.
Norges Bank in January kept interest rates on hold at a 17-year high of 4.50% and maintained its plans to start cutting borrowing costs in March for the first time in five years.
The central bank, which targets core inflation of 2.0%, has said that it may cut interest rates three times in total throughout the year and that the policy rate would decline to 3.75% by the end of 2025.
"Perhaps we should be cautious about completely questioning Norges Bank's planned rate cut in March. However, there is little doubt today that the interest rate path will be revised upward," Handelsbanken said.
Meanwhile, Nordea Markets said that Norges Bank would have to think twice about cutting rates at all this year.
"The March cut is definitely off," the broker said in a research note.
Norges Bank is scheduled to make its next policy rate announcement on March 27.
Headline inflation, which includes changes in energy costs and taxes, surged in February to 3.6% from 2.3% in January, while analysts in the Reuters poll had expected a reading of 2.9%.
(Reporting by Louise Rasmussen, editing by Anna Ringstrom; Editing by Toby Chopra)
The article discusses Norway's rising inflation and its impact on the central bank's planned interest rate cuts.
Core inflation rose to 3.4%, while headline inflation increased to 3.6%.
Norges Bank planned to cut rates in March but may reconsider due to rising inflation.
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