Norway’s central bank handed out an early holiday gift to borrowers on Thursday, when it confirmed that its executive board had opted against another interest rate hike. The krone strengthened anyway, but that’s probably tied to higher oil prices.
Norges Bank’s board announced that its policy rate would remain at 1.5 percent. The policy rate has been raised gradually since 2018, the board noted, but now many analysts and economists think it will remain steady. Low interest rates have now become “normal,” Kari Due-Andersen, chief economist at Handelsbanken Capital markets, told newspaper Dagens Næringsliv (DN).
Norges Bank Governor Øystein Olsen seemed to reinforce that, stating in the bank’s press release Thursday that Norway’s economic outlook and balance of risks “suggests that the policy rate will most likely remain at the current level in the coming period.”
Inflation is “close” to targeted levels, Olsen also noted, and growth in the mainland economy is slowing, meaning there was no need to apply any additional interest rate brakes at present.
Norway’s weak krone, meanwhile, has strengthened a bit in recent days. After trading at around NOK 9.20 to the US dollar earlier this month, it cost NOK 8.97 to buy a dollar on Thursday morning.