Norwegian Interest Rate Kept at 1.5%

November 2, 2012

On Wednesday, the Norges Bank Executive Board announced a decision not to change its 1.5% policy rate.  It had been at that level since two cuts of 50 basis points in December 2011 and 25 bps in March 2012.  The rate bottomed at 1.75% in the Great Recession and had undergone 100 basis points of increase between October 2009 and May 2011.  A statement included the following forward guidance:

Developments in the Norwegian economy give reason to believe that inflation will gradually pick up. The analyses in this Report suggest that the key policy rate should be kept at today’s level into next year, followed by a gradual increase towards a more normal level. The forecast for the key policy rate in 2013 is slightly lower than the June forecast.

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



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