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Norway Monetary Policy October 2018

Norway: Norges Bank keeps rate unchanged in October

In line with market analysts’ expectations, Norges Bank announced on 24 October that it was keeping the sight deposit rate unchanged at 0.75%. Previously, on 25 September, the Bank had hiked this key interest rate for the first time in eight years due to accelerating inflation and strong economic growth.

At its October monetary policy meeting, the Bank’s Executive Board noted that inflation remained stable at 3.4% in September and well above its 2.0% target. In addition, core inflation—which excludes tax changes and energy prices—was steady at 1.9%. In terms of economic growth, the metrics in the run-up to the meeting were mixed: The economy grew month-on-month in July but then contracted in August as hot weather hit the agriculture sector. The labor market seemed to remain tight through September, with the unemployment rate unchanged at 2.4% in the month.

Overall, the Executive Board judged that the economic outlook supports a further gradual increase in the sight deposit rate, likely in Q1 2019. The next monetary policy meeting is set for 13 December, which will be accompanied by the Bank’s Q4 Monetary Policy Report.

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