Norway Monetary Policy May 2019


Norway: Norges Bank holds fire in May but prepares for a June interest rate hike

May 9, 2019

Norges Bank kept the sight deposit rate unchanged at 1.00% at its monetary policy meeting on 9 May, as overwhelmingly expected by market analysts. At its previous meeting on 21 March, Norges Bank hiked the sight deposit rate to 1.00% from 0.75%. The Bank noted at the time that the sight deposit rate “will most likely be increased further in the course of the next half-year”. This message was reaffirmed on 9 May, with Governor Oystein Olsen stating that, “the outlook and balance of risks suggests that the policy rate will most likely be raised in June.”

May’s monetary policy decision came against a backdrop of persistently high inflationary pressures, with inflation edging down to 2.9% March (February: 3.0%) but remaining above Norges Bank’s 2.0% target for the fourteenth consecutive month. (After the monetary policy meeting took place, inflation in April was reported to be stable at 2.9%.) Although Norges Bank will have wanted to bring inflation closer to its target rate in May, it likely kept its finger off the rate-hike trigger due to the “uncertainty surrounding global developments”, which continues to cloud the outlook for the Norwegian economy.

The next monetary policy decision will be taken on 20 June.

FocusEconomics Consensus Forecast panelists expect the key policy rate to end 2019 at 1.28%. For 2020, panelists project the rate to end the year higher at 1.52%.

Author:, Economist

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Norway Monetary Policy Chart

Norway Monetary Policy May 2019

Note: Sight deposit rate in %.
Source: Norges Bank (NB).

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