Norway's central bank left its key interest rate unchanged on Thursday and signaled that the next hike would come in the second half of this year. The Executive Board raised the key policy rate by 25 bps to 1 percent, in line with economists' expectations.
The bank had signaled a hike in March in the previous policy sessions. The previous change in the rate was a quarter-point hike in September, which was the first since 2011.
"Our current assessment of the outlook and balance of risks suggests that the policy rate will most likely be increased further in the course of the next half-year", Norges Bank Governor Oystein Olsen said. The Norwegian economy is expanding at a solid pace and the upturn seems to be stronger than anticipated, the bank said.
The central bank also pointed to prospects for weaker growth and lower interest rates abroad.
"The policy rate forecast indicates a slightly faster rate rise in 2019 and a somewhat lower policy rate further out than projected in the previous Report," the Norges Bank said.
"With this path for the policy rate, inflation is projected to be close to target in the years ahead, at the same time as unemployment remains low."