Norway: Norges Bank stays put
May 10, 2012
At its 10 May monetary policy meeting, Norges Bank (NB) decided to maintain the sight deposit rate unchanged at 1.50%, which was widely expected by most market analysts. The move marked the first halt since December 2011 after the Bank cut rates in the previous two meetings. The Central Bank stated that there are signs that activity in the Norwegian economy is slightly higher than expected, but tensions in international markets have flared up again. Moreover, growth in the petroleum and oil sector remains strong despite oil prices started to fall since March. In addition, the krone weakened somewhat after the 25 basis-point rate cut implemented in March, but has remained fairly stable since then. On the external front, the Bank stressed the renewed turbulence in financial markets observed in recent weeks and sluggish developments in most of Norway's main trading partners. Against this backdrop, the Bank adopted a more hawkish tone, stating that the key policy rate should further out be raised gradually to a more normal level.