Central Bank of Norway

March 15, 2018

Although the Executive Board of Norges Bank left the policy interest rate at 0.50%, it released a less dovish statement that moved up the likely first interest rate hike from next next autumn to the summer before. Earlier this month, the inflation target had been lowered to 2.0%, and officials are justifying a somewhat earlier rate hike by citing economic trends.

The upturn abroad and in Norway is continuing. Economic growth appears to be somewhat stronger than expected, and the output gap for Norway is closing. Underlying inflation is low, but rising capacity utilization will probably push up price and wage inflation further out.

The statement underscores that even after an initial rate hike, it is the Board’s intent to proceed with caution.

Copyright 2018, Larry Greenberg. All rights reserved. No secondary distribution without express permission.

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