Norges Bank Leaves Key Policy Interest Rate at 1.5% in Norway

December 19, 2012

Norges Bank in October 2009 became the first European central bank to hike its policy interest rate following the Great Recession.  Thanks to cuts of 50 basis points a year ago and a further 25 bps in March 2008, however, the current 1.5% level is on net only 25 basis points above the 2009 trough and 425 bps below the pre-October 2008 high.  Similar to when monetary officials met October 31st, a statement was released that predicts a gradual pick-up of inflation next year points to eventual need for interest normalization. For now, inflation of 1.1% remains significantly below the 2.5% target, so the time for raising interest rates is not yet at hand.  Considerable global uncertainty persists, and Euroland will remain in recession for the time being.  Domestic growth has been solid, in contrast, but largely as officials had assumed previously.

Copyright 2012, Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.

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