Norges Bank

November 5, 2015

The latest meeting of the Executive Board resulted in no change in Norway’s record low central bank rate of 0.75%.  As an energy producer and exporter, Norway’s economy was hit by the share decline in world oil prices since June 2014.  Real GDP is likely to expand less than 1% in 2015.  A statement from officials released today expresses some concern about the weak krone and concluded that not changing the monetary policy rate now was appropriate.  There were two 25-basis point cuts earlier this year and a third in the final month of 2014.  Norway was the first European central bank to hike interest rates after the Great Recession, raising such by 25 basis points in August 2009, and three more such tightenings by May 2011 put the level at 2.25%.  Hindsight now reveals that the central bank acted prematurely.  Norway is not alone in that regard, but no central banks can be criticized of allowing excessive inflation by delaying rate normalization for too long after the global financial crisis.

Copyright 2015, Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.

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