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Wednesday, July 17, 2024

Still no hike in interest rates

The central bank board that sets interest rate levels in Norway decided on Wednesday to once again leave them where they are. Analysts don’t expect any increase until sometime next year.

Inflation remains low, interest rates are low in most other countries around the world and Norwegian exporters don’t want to see the local currency, the krone, get any stronger. All told, that prompted bank board members to leave Norway’s current key lending rate at 2 percent.

Jan F Qvigstad, deputy governor of Norges Bank, noted that the inflation rate remains “somewhat below” the central bank’s target of 2.5 percent. Activity is increasing in the Norwegian economy, he said, but “there is still some margin of spare capacity.”

Nor are the historically low interest rates in Norway triggering any major increase in household debt levels, the bank reported, and it called the recent rise in housing prices “moderate.”

The bank also kept interest rates steady at its last meeting in August, after raising them a quarter-point in May. While economic activity has been on the rise, and growth is high in Asia, prospects in the US have been lowered. The economies of several European countries remain troubled and the bank said financial markets “are still marked by uncertainty.”

Given the low interest rates elsewhere, “on balance, these factors suggest that the interest rate should be kept unchanged at 2 percent,” Qvigstad said.

Views and News from Norway/Nina Berglund
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