BRUSSELS (MNI) – Norway’s central bank left its key policy rate
unchanged at 1.5% for the fourth time in a row on Wednesday, charting a
course between the opposing currents of slow growth and low interest
rates abroad, and a robust domestic economy and housing market.

“The key policy rate is being kept at a low level because inflation
is low and global interest rates are at very low levels,” Governor
ystein Olsen said in a statement.

At the same time, growth among Norway’s trading partners is “weak
and the uncertainty surrounding developments in the international
economy is elevated,” Norges Bank noted.

“Measures by a number of central banks have, nevertheless,
contributed to easing financial market tensions recently,” the central
bank said.

In a new Monetary Policy Report published along with the rate
announcement, Norges Bank said that it now saw its key policy rate
remaining at 1.5% “into next year” and then “rising gradually towards a
more normal level.”

“The forecast for the key policy rate in 2013 is slightly lower
than the June forecast,” Governor Olsen said. In its statement Norges
Bank said that it saw the key policy rate remaining between 1%-2% until
its next Monetary Policy Report is published on March 14 2013 “unless
the Norwegian economy is exposed to new major shocks.”

Norges Bank described the Norwegian economy as “robust”, boosted by
vigorous activity in the construction and oil-related industries,
although other manufacturing sectors were feeling the impact of weak
external demand, the bank observed,

Household debt and house prices, major concerns of the central
bank, are “still rising faster than income,” the bank noted. Norges bank
lowered its growth forecast slightly for 2012 to 3.25% from 3.5% and but
left its 2.5% GDP forecast for 2013 unchanged.

The central bank projected CPI inflation of 0.75% in 2012 and 2.0%
2013. In its June report it had forecast 1% inflation this year and
1.75% in 2013.

“Developments in the Norwegian economy give reason to believe that
inflation will gradually pick up,” Norges Bank said.

–Brussels Newsroom, +324-952-28374;

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