Norway Monetary Policy January 2020


Norway: Norges Bank keeps rates unchanged in January

January 23, 2020

The Executive Board of Norges Bank unanimously decided to keep the sight deposit rate at 1.50% at its monetary policy meeting on 23 January. The decision met market expectations after the Bank previously stated the policy rate “will most likely remain at this level in the coming period”.

January’s decision came against a backdrop of inflationary pressures that were broadly in line with the Bank’s previous projections: Inflation eased to 1.4% in December from 1.6% in November, mainly weighed on by a fall in electricity prices. Consequently, inflation remained below the Central Bank’s 2.0% target rate, and the Bank expects inflation to stay below target in the short-term—citing unexpected strength in the krone in recent weeks, which will likely keep inflationary pressures modest. Meanwhile, the domestic economy eased somewhat in November according to monthly economic activity data, but continued to perform well as a tight labor market and a solid housing market kept economic conditions robust. In addition, household debt growth continued to evolve as the Bank had previously expected, allowing the Bank to stay put in January. On the external front, uncertainty around global headwinds have receded as of late, following the partial trade truce between the U.S. and China, and a clearer outcome for Brexit.

The Bank’s stance was virtually unchanged in January, noting “capacity utilisation in the Norwegian economy appears to be somewhat above a normal level, but new information supports the view that the economy is probably near a cyclical peak.” Looking ahead, the Bank will likely keep rates unchanged, barring a significant deterioration in global economic conditions.

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

FocusEconomics Consensus Forecast panelists see the sight deposit rate ending 2020 at 1.56%. Meanwhile, the panel projects the sight deposit rate to end 2021 at 1.64%.

Author:, Economist

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Norway Monetary Policy Chart

Norway Monetary Policy January 20 20 0

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

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