Norway Monetary Policy December 2016

Norway

Norway: Norges Bank leaves rate unchanged at 0.50%

December 15, 2016

At its 15 December policy meeting, Norges Bank (NB) decided to leave its key policy rate at the all-time low of 0.50%, as was expected by market participants.

Norges Bank described the global economic environment as moderately improving, but with persistent low inflation and low policy rates in Norway’s main trading partners. As oil prices had risen to a level slightly higher than expected, the krone had appreciated more than foreseen, the Bank further stated. This prompted it to leave the policy rate at a low level.

Norway’s economy had not recovered from the oil price slump as fast as expected by the last monetary policy review in September 2016, NB acknowledged. In light of still subdued investments in the petroleum industry, fiscal policy will remain expansionary. In the labor market, unemployment has been stable in the last three months but wages have grown at a sluggish pace. The Central Bank cut its forecast for total GDP growth in 2017 to 0.5% from the projected 1.3% in September and for mainland GDP to 1.5% (September: +1.8%).

Regarding prices in Norway, the Bank stated that in recent months inflation had been lower than projected and that the recent appreciation of the krone would further amplify the downward trend. However, NB highlighted the heated situation in the housing market, where housing prices and household debt have been surging. For 2017, the Bank now projects consumer prices to increase 2.3%, down from the 2.6% forecasted in September.

Against this backdrop, interest rates are projected to remain low in the coming years and a future decrease of the key policy rate has become more likely. While the expansionary monetary policy could support the Norwegian economy, continuously low interest rates are increasing the vulnerability of the financial system, the Bank concluded.

FocusEconomics Consensus Forecast panelists expect a sight deposit rate of 0.46% at the end 2017. For 2018, the panel sees the key policy rate ending the year at 0.52%.


Author: Marlène Rump, Senior Data Analyst

Sample Report

Looking for forecasts related to Monetary Policy in Norway? Download a sample report now.

Download

Norway Monetary Policy Chart


Norway Monetary Policy December 2016 0

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


Norway Economic News

  • Norway: Inflation accelerates in November

    December 10, 2018

    Consumer prices rose 0.5% in November compared to the previous month, contrasting the 0.2% fall in October.

    Read more

  • Norway: Industrial production growth rebounds in October

    December 7, 2018

    According to Statistics Norway, industrial production rose a seasonally-adjusted 2.3% in October compared to the previous month, contrasting the revised 2.0% fall in September (previously reported: -1.5% month-on-month). The rebound in October was due to a broad-based improvement across industrial sectors.

    Read more

  • Norway: The economy wobbles in September

    November 13, 2018

    According to monthly GDP data released by Statistics Norway, the total economy contracted a seasonally-adjusted 0.5% in September over the previous month, down from the revised 0.2% fall in August (previously reported: -0.1% month-on-month).

    Read more

  • Norway: Inflation moderates in October

    November 9, 2018

    Consumer prices fell 0.2% month-on-month in October, contrasting the 0.6% gain in September.

    Read more

  • Norway: Industrial production growth slows in September

    November 7, 2018

    According to Statistics Norway, industrial production fell a seasonally-adjusted 1.5% in September compared to the previous month, contrasting the revised 1.6% growth registered in August (previously reported: +1.8% month-on-month). The fall in September was due to a near-broad-based decline across industrial sectors: The extraction and related services sector—the largest industrial sector in Norway—observed a 3.5% fall in output.

    Read more

More news

Search form