Norwegian Central Bank keeps key policy rate unchanged

The Norwegian Central Bank announced last week that it would not be making any changes to the key policy rate. The Executive Board agreed to maintain the 1.75 percent level that was approved at a previous meeting in December last year.

“We decided to keep the interest rate unchanged at today’s meeting,” said the bank’s deputy governor Jan F Qvigstad. “Inflation and the level of activity may for a period be somewhat lower than anticipated. The analyses presented today indicate that the key policy rate should be raised gradually, but somewhat later than expected in autumn,” he added..

Qvigstad also stated that the Central Bank’s regional branches had indicated that output is rising gradually but, with some Norwegian industries still in decline, not at a pace to warrant any rate increases.

The Central Bank’s confirmation that the Asian market has shown strong growth was tempered by reports of the more moderate upswing across Europe.Interest rate expectations for the bank have declined abroad in recent months according to the Norway Post, with the comparative interest rates with other countries widening since autumn. This has brought unanticipated strength and stability to the Norwegian krone.

The bank believes that the strengthened currency, coupled with lower wage growth prospects, will exert further downward pressure on inflation in the future.
The Norwegian Central Bank Executive Board has declared that its strategy, barring any major economic shocks, will be to maintain the key policy rate within a 1.5-2.5 percent interval until June 23, when the country’s next Monetary Policy Report will be published.