Norwegian Monetary Policy Remains on Pause

October 23, 2014

The interest rate cuts by the Executive Board of Norges Bank of 50 basis points in December 2011 and 25 bps in March 2012 returned the benchmark to 1.5%, its lowest level since October-November of 2009 and just 25 basis points above the Great Recession low earlier in 2009.  No changes have been made at the sixteen meetings since the cut in March 2012.  The statement released today after the most recent policy meeting does not anticipate a rate increase before the end of 2015, citing the recent drop in oil prices and more dreary growth outlook in the euro area as new sources of uncertainty and projecting inflation running just slightly below the 2.5% target.  A decline of the krone since September is justifiable in light of the fall in oil prices and will not be a trigger for changing policy.

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

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