Interest rates unchanged

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Members of the executive board of Norway’s central bank (Norges Bank) stayed on the same course they’ve held for several months, opting against any increase in interest rates for the time being. Analysts now think rates will stay low until next summer.

Outgoing central bank chief Svein Gjedrem said that growth was moderate and inflation low, so the board he heads left the bank’s key policy rate at 2 percent. That was exactly what they decided at their last interest rate meeting in September also.

“Consumer price inflation has been lower than expected and inflation is projected to remain at around 1.5 percent in the period to summer 2011,” Gjedrem said after the board met on Wednesday. “At the same time, growth in the Norwegian economy is continuing at a moderate pace.”

Gjedrem noted that the outlook for the world economy remains “highly uncertain” but barring any “new major shocks” to the Norwegian economy, analyses indicate the key policy rate “should be held at the current level over the coming quarters and then gradually raised towards a more normal level.”

Gjedrem’s term as central bank governor is about to end. He’ll be replaced after New Year by the current head of state statistics bureau SSB, Øystein Olsen, who has warned that borrowers today should be prepared that rates could more than double in the years ahead.

Views and News staff