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Friday, June 14, 2024

No change in central bank’s key rate, krone slightly stronger

The executive board of Norway’s central bank (Norges Bank) has once again opted to keep its so-called “key policy rate” unchanged at 0.5 percent. The board had already indicated earlier this fall that it was unlikely to be raised or lowered any time soon.

While some commercial banks in Norway are raising rates on home mortgages, the central bank sees no need to do the same. Oil prices, which fuel Norway’s economy, have increased and the country’s currency, the krone, has also regained some of its value, the bank board noted. There’s was no pressing need, then, to lower rates to stimulate spending.

Housing prices and household debt, meanwhile, have “risen somewhat more than projected,” the bank stated in a press release Thursday, while consumer price inflation “has been lower than expected.”

Overall, said Norges Bank Governor Øystein Olsen, “developments since September do not differ substantially from the projections in the September Monetary Policy Report.” The key policy rate was thus kept steady and “most likely” will “remain at 0.5 percent in the period ahead,” the bank stated.

The value of the Norwegian krone rose a bit on the news, with one US dollar still costing around NOK 8.28 before the interest rate announcement and NOK 8.22 just after. An hour later, though, it fell back a bit, to NOK 8.24. The krone also gained slightly against the euro but perhaps more psycholigically, since it went from NOK 9.02 to NOK 8.98 but later to NOK 8.99. staff



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