Norway’s central bank is poised to pause its tightening cycle for the first time since January with a planned final hike anticipated over the coming months to counter imported inflation fueled by its weak currency.

All economists surveyed by Bloomberg expect Norges Bank to keep its key interest rate at 4.25% on Thursday. Still, 14 of 20 economists see the rate peaking at 4.5% during the quarter, with the rest penciling in the current level as the high point.

Investors are likely to focus on the wording of forward-looking comments by Governor Ida Wolden Bache and her colleagues, who in September signaled one more quarter-point increase in borrowing costs, “most probably in December.” No new economic forecasts or projections for the rate path will be published in conjunction with this week’s so-called interim meeting.

The real economy is roughly “where Norges Bank expected it to be,” said Sara Midtgaard, a senior economist with Svenska Handelsbanken AB, the best rate forecaster based on two years of contributed surveys. “But what I think the central bank now is really concerned about is the Norwegian krone, which is 4% weaker than they expected back in September, and Norges Bank is now focusing a lot on how a weak krone can affect inflation in Norway.”

Inflation has slowed more rapidly since August than economists and the central bank expected, lowering pressure on policymakers to tighten more. The labor market and economic output have also softened marginally, in line with its outlook.

Norges Bank was the first in the G-10 space of major currencies to begin raising rates from zero more than two years ago. It’s also moved at a more measured pace than its biggest peers.

When Norway’s hikes began trailing those of the Fed and the ECB last year and the oil price declined from its 2022 high, the krone emerged as the worst G-10 performer. It’s been hit in past weeks by an increase in risk aversion that has outweighed fossil-fuel price gains since the outbreak of the Israel-Hamas war.

Norges Bank may still end up reversing from its plan to potentially raise rates in December or in early 2024, according to DNB Bank ASA’s senior economist Kyrre Aamdal.

“The decline in inflation may lead to a canceling of the rate hike, but Norges Bank will see inflation figures for October and November before the December meeting,” he said in a note to clients. “With still high uncertainty around these numbers, we expect Norges Bank to reiterate the guiding from September.”

Whether rates peak at the current level or at 4.5% that will be the highest level since 2008, when borrowing costs hit a high of 5.75%.

--With assistance from Joel Rinneby, Harumi Ichikura and Thomas Hall.