Norway’s central bank (Norges Bank) announced on Thursday that it had decided keep its policy rate unchanged at 4.5 percent, and that it’s likely to stay there “for some time ahead.” That was in line with most economists’ expectations, but it disappointed borrowers hoping for some rate relief.
The bank’s committee on monetary policy and financial stability had earlier hinted it might lower rates this autumn after months of raising them from unusually low levels. The higher rates have “contributed to cooling down the Norwegian economy,” noted the committee Thursday morning, and inflation has eased. It’s still not down to the bank’s target of just 2 percent, however, so a rate decline was ruled out.
The central bank also could have raised rates to help strengthen Norway’s sagging currency, the krone, but opted against that, too. Even though the krone has depreciated and “is weaker than assumed,” the committee decided that “tight monetary policy … will likely be needed for some time ahead to bring inflation down to target within a reasonable time horizon.”
That indicates the policy rate may remain at 4.5 percent through the end of the year. The bank cited “uncertainty” around economic development, though, and concern with the krone exchange rate. New forecasts are due ahead of the next monetary policy meeting in September. Norway’s overnight lending rate remains at 5.5 percent and the reserve rate at 3.5 percent.
NewsinEnglish.no staff
