Norway: Key policy rate is left unchanged in August
August 15, 2018
At its monetary policy meeting held on 15 August, Norges Bank’s Executive Board stood pat and left the key policy rate at its all-time low of 0.50%, where it has been since March 2016. The decision was in line with market expectations.
The Norwegian economy appears to be performing well as loose monetary policy, a tight labor market, high hydrocarbon prices and expansionary fiscal policy continue to support growth. Against this backdrop, price pressures have started to build in recent months and inflation hit 3.0% in July—the highest reading since December 2016.
At its previous monetary policy meeting in June, Norges Bank noted that the economic outlook and the balance of risks did not appear to warrant a change in the status quo, although a hike in the key policy rate was tentatively penciled in for September. At its 15 August meeting, Norges Bank largely restated this theme and thus left the door open to a hike at its next meeting on 20 September. Such action would also help to restrain house price inflation and household debt growth.
Norway Interest Rate Forecast
FocusEconomics Consensus Forecast panelists expect the key policy rate to end 2018 at 0.75%. For 2019, panelists expect the rate to end the year higher at 1.27%.
Author: Edward Gardner, Economist