Central Bank of Norway Keeps 0.50% Interest Rate

March 16, 2017

A 50-basis point interest rate cut in December 2011 followed by five 25-bp reductions from March 2012 to March 2016 depressed Norway’s central bank interest rate from 2.25% to the current 0.50% level. Today’s released new statement projects the rate will stay at this level for more than another year but concedes a higher probability of a cut in the period just ahead than of an increase because “there are prospects that inflation will be lower than expected earlier.” Officials chose not to cut the rate now because “the upturn in the real economy appears to have taken hold, and unemployment has declined. Inflation expectations appear to be firmly anchored. With a key policy rate close to the current level, there are prospects that inflation will pick up again further out. An even lower key policy rate could lead to a further acceleration in house price inflation and debt accumulation.”

Copyright 2017, Larry Greenberg. All rights reserved. No secondary distribution without express permission.



Comments are closed.