Norway’s central bank (Norges Bank) kept its key policy rate unchanged at 2.25 percent on Wednesday, in line with economists’ expectations. Central bank chief Øystein Olsen also confirmed the rate was unlikely to rise any time soon.
“Based on Norges Bank’s current assessment, the key policy rates will be kept at the current level for some time ahead,” Olsen said.
The bank’s Executive Board, which sets rates, noted that inflation is low in Norway but economic growth remains “robust.” With many countries, including what the bank called “advanced economies,” facing an “amplified and prolonged downturn,” the outlook for the Norwegian economy will be affected.
The bank therefore saw no need to raise rates to cool down the current growth in Norway.
“If the turbulence abroad intensifies and the outlook for growth and inflation weakens further, the key policy rate may be reduced,” Olsen said. If the bank sees improved prospects for higher growth and inflation, the key rate may be raised, he added.
For now, the bank board decided to keep the rate between 1.75 percent and 2.75 percent until its next report on March 14, “unless the Norwegian economy is exposed to new major shocks.”
Some banks are raising their interest rates even though the central bank isn’t doing the same, because of tighter credit markets abroad.
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