Norwegian Central Bank Rate Left at 1.5%

June 20, 2013

Rate History:  The key policy rate was slashed from 5.75% in October 2008 to 1.25% by mid-2009, then raised four times by 25 bps each between October 2009 and May 2011.  From the resulting 2.25% level, the Executive Board later implemented two reductions, first by 50 bps to 1.75% in December 2011 and by 25 bps to 1.5% in March 2012. 

Looking Forward:  There have been no further changes, including after today’s meeting.  Today’s statement justified the current policy stance and indicated a policy bias of no change to lower for several more quarters.

The key policy rate is low because inflation is low and because interest rates abroad are very low. At the same time, there is a substantial spread between the key policy rate and the interest rates facing households and enterprises.  There are prospects that the key policy rate will remain at the current level, or somewhat lower, in the year ahead.

Copyright 2013, Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.

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