Central Bank of Norway

September 24, 2015

Norway’s key monetary policy rate has been cut by 25 basis points at a second straight meeting of the Executive central bank board, and the released statement warned of further possible reductions in the coming year.  The economy of this energy producer has been hurt by sharply falling oil prices. The statement provides two reasons for the more accommodative stance:

  • “Growth in the Norwegian economy is likely to remain low for a longer period than projected earlier owing to the fall in oil prices through summer.”
  • “Low wage growth is keeping down cost growth, and inflation will edge down as the effects of the krone depreciation unwind.”

The interest rate now drops to a record low of 0.75%.  The prior cut in June was the first since December 2014, also a move of 25 bps.  There were also reductions of 50 basis points in December 2011 and 25 bps in March 2012.  Four hikes between October 2009 and May 2011 had raised the rate by a percentage point to 2.25%.

Copyright 2015, Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.



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