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Norway Monetary Policy August 2019

Norway: Norges Bank keeps rates unchanged in August but expects further tightening before year-end

The executive board of Norges Bank unanimously decided to keep the sight deposit rate unchanged at 1.25% at its monetary policy meeting on 15 August. This comes after the executive board voted unanimously to raise the key policy rate by 0.25 percentage points at its previous meeting in June.

July’s decision came against a backdrop of modest inflationary pressures: Inflation was steady at 1.9% in July, just below the Bank’s 2.0% target rate, although underlying inflation came in just above target. Nevertheless, a weaker krone—likely weighed on by a fall in oil prices—will likely stoke price pressures ahead. External developments, meanwhile, appeared to leave the Bank in no hurry to raise rates again in August, as highlighted by increasing uncertainty over Brexit, heightened global trade tensions and recent increased dovishness by other major central banks, notably including the U.S. Federal Reserve and the ECB. That said, Norges Bank still noted, “the key policy rate would most likely be raised further during the year”, in line with the majority of our panelists’ projections.

The next monetary policy decision will be taken on 19 September.

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