Norges Bank

March 27, 2014

The Executive Board of Norway’s central bank chose to retain the overnight deposit rate at 1.5%, its level since cuts of 50 basis points in December 2011 and a follow-up 25 basis points in March 2012.  Moreover, a released statement included forward guidance that the key interest rate will likely not be raised until the summer of 2015.  In December, that projected timing was moved to then from the summer of 2014.  Today’s statement notes that

  • Growth prospects ahead have weakened somewhat.
  • The krone has been slightly weaker than assumed.
  • There are prospects that consumer price inflation will be slightly higher than previously projected.  Inflation is projected to be somewhat lower, but close to, 2.5 percent in the years ahead.
  • The path for the key policy rate remains approximately unchanged from December. 

The next interest rate policy statement will be issued on May 8.  After slashing the main interest rate from 5.75% to 1.25% between October 2008 and June 2009, four hikes of 25 basis points were engineered between October 2009 and May 2011.

Copyright 2014, Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.

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