Norwegian Monetary Policy Unchanged

September 18, 2014

The Executive Board of Norges Bank left its key interest rate at 1.5%.  This was the fifteenth consecutive meeting to decide that policy didn’t need changing, and at 1.5% such is just 25 basis points above the Great Recession low.  Seven reductions between October 2008 and June 2009 had cut the interest rate to 1.25% from 5.75%.  There were then four hikes of 25 basis points in October 2009, December 2009, May 2011 and May 2011 followed by cuts of 50 basis points in December 2011 and 25 bps in March 2012.

A released statement reiterated that a rate hike is unlikely before end-2015.  That projected timing was revised outward this past June from around mid-2015 signaled earlier.  Officials also noted that increases in the key policy rate will proceed gradually in 2016.  Although growth since midyear has been somewhat faster than assumed, the cause was temporary factors, and the outlook for growth, as well as inflation, is essentially the same as it was when the June economic review was done.  “Inflation is projected to run somewhat below, but close to, 2.5 percent in the years ahead.”  The next review is scheduled for December 11.

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



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