Norway’s central bank decided on Thursday to keep its key policy rate at its record low of 0.0 percent, but noted that interest rates may rise sooner than previously predicted after vaccination programs get underway. The country’s currency, meanwhile, was ending the week much stronger than when it began.
Norges Bank Governor Øystein Olsen thinks interest rates will rise after the arrival of the Corona virus vaccine. Prime Minister Erna Solberg announced on Thursday that delivery of the first vaccines is now expected on Christmas Eve, meaning vaccinations can begin from December 27.
The bank determined that the Corona virus’ “powerful” impact on the economy, meanwhile, makes it most prudent to keep interest rates stable “until we see clear signs that conditions in the economy are normalized.” Economists think that may occur in March 2022 instead of at the end of 2022. The central bank’s key policy rate was 1.5 percent when the Corona crisis began in March. It was slashed down to the historic zero in two rounds last spring, with the intent of bringing production and employment more quickly back to normal levels.
Norway’s krone, meanwhile, has strengthened in a move tied to a rise in oil prices. At midday Thursday it cost NOK 8.59 to buy one US dollar, compared to more than NOK 9 just a week ago.