Norway skyline at night

Norway Monetary Policy August 2021

Norway: Norges Bank stays put in August; hints at September hike

At its monetary policy meeting on 19 August, the Executive Board of Norges Bank unanimously voted once again to hold fire and leave the sight deposit rate unchanged at its record low of 0.00%. The decision was widely anticipated by market analysts and marked the 10th consecutive hold.

The economic recovery continued in Q2, with activity and household consumption performing better than expected in June’s monetary policy report, thanks to the lifting of Covid-19 restrictions and an improving labor market. Moreover, underlying consumer price inflation has dropped in recent months, while wage growth was in line with June’s projections in July. That said, the Bank sees inflation picking up further ahead as activity continues to accelerate. However, the Bank deemed expansionary policy was still needed, as activity has not yet returned to pre-pandemic levels and uncertainty remains elevated.

Regarding forward guidance, the hawkish tone of the previous meetings continued. The Bank believes that the reopening of the economy can continue amid solid vaccination progress. Therefore, the ongoing recovery is strong enough to start tightening the policy stance in order to help bring back inflation to the 2.0% target and reduce the risk of unemployment becoming entrenched at high levels. The Committee stated that in its “current assessment of the outlook and balance of risks, the policy rate will most likely be raised in September”. As such, half of our panelists see the rate ending this year at 0.25%, while the other half sees another hike in Q4 and the rate ending the year at 0.50%.

The next monetary policy rate decision is set to be announced on 23 September.

Free sample report

Access essential information in the shortest time possible. FocusEconomics provide hundreds of consensus forecast reports from the most reputable economic research authorities in the world.
Close Left Media Arrows Left Media Circles Right Media Arrows Right Media Circles Arrow Quote Wave Address Email Telephone Man in front of screen with line chart Document with bar chart and magnifying glass Application window with bar chart Target with arrow Line Chart Stopwatch Globe with arrows Document with bar chart in front of screen Bar chart with magnifying glass and dollar sign Lightbulb Document with bookmark Laptop with download icon Calendar Icon Nav Menu Arrow Arrow Right Long Icon Arrow Right Icon Chevron Right Icon Chevron Left Icon Briefcase Icon Linkedin In Icon Full Linkedin Icon Filter Facebook Linkedin Twitter Pinterest