FRANKFURT (MNI) – Norway’s central bank left its key policy rate
unchanged at 2.0% on Wednesday amid ongoing uncertainty regarding global
economic outlook.
The first European central bank to tighten monetary policy in
October last year, the Norges Bank has left it key rate unchanged since
its last hike in May.
Looking ahead, the central bank said that “the consideration of
guarding against the risk of future financial imbalances that may
disturb activity and inflation somewhat further ahead suggests that the
key policy rate should not be kept low for too long.”
Thus far low interest rates have not triggered an increase in
household debt growth, the Norges Bank observed. However, “the rise in
house prices and consumer spending has picked up recently,” it observed.
“According to the October Monetary Policy Report, the Executive
Board’s monetary policy strategy is that the key policy rate should be
in the interval 1.5%2.5% in the period to the publication of the next
Report on 16 March unless the Norwegian economy is exposed to new major
shocks,” Norges Bank reminded.
Central bank rates abroad, on the other hand, are expected to
remain low for some time, the central bank said.
In Norway, underlying inflation has been approximately as projected
and is now around 1.5%, while growth in the Norwegian economy has picked
up as expected, the central bank said. It also observed that while
capacity utilisation is increasing, the level of activity is “probably”
still somewhat lower than normal.
On the global economy, the Norges Bank said that “growth has been
unexpectedly high among several of Norway’s most important trading
partners. In addition, equity prices are holding up and oil prices have
risen.”
At the same time, however, “uncertainty regarding developments in
Europe persists,” it said.
–Frankfurt: +49 69 720 142, jtreeck@marketnews.com
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