There was, as expected, no change in interest rates when the executive board of Norway’s central bank (Norges Bank) met on Thursday. The bank board kept its key policy rate steady, at 0.5 percent.
That’s where it’s been since March of last year, and most economists and analysts had predicted there would be no change. Norway’s economy has been recovering from the shock of the oil price collapse in 2014, so few saw any need to lower rates to stimulate the economy.
Nor did many see a need to raise rates, even though Norway’s krone continues to be battered by oil prices below USD 50 a barrel. Some think raising the record-low rate of 0.5 percent would not only strengthen the krone but also cool down what has been an overheated real estate market in Norway. It’s already been cooling down, though, so the bank board acted in line with most professional expectations and kept their key interest rate low at their last meeting before the summer holidays.
The krone did strengthen a bit on the news anyway, perhaps because there was no decline and oil prices rose a bit. Commentators claimed it’s less probable than ever that interest rates will rise in the near future, with some predicting they’ll stay where they are through 2019 and perhaps beyond.