Central Bank of Norway Keeps 1.5% Benchmark Interest Rate and Releases Dovish Statement

June 19, 2014

Norges Bank’s policy rate has been at 1.5% since a 25-basis point cut in March 2012, which followed a 50-bp cut in November 2011.  The current level is only 25 basis points above the mid-2009 low.  A statement from the central bank Executive Board observes that other countries are likely to take longer to raise rates than thought previously and pushes out the probable first Norwegian rate increase past end-2015 from the summer of 2015 indicated earlier by officials.  When tightening comes, it will be done gradually, and moreover there is some risk in the meantime of a cut: “A further weakening of the outlook for the Norwegian economy may warrant a reduction in the key policy rate.”  Growth has been moderate, and inflation in Norway is projected to run marginally below 2.5% in coming years.  The next policy decision is scheduled for September 18.

Copyright 2014, Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.



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