As expected by most analyst, the Norwegian Central Bank (Norges Bank’s) Executive Board at its Wednesday meeting decided to increase the key policy rate by 0.25 percentage point to 1.50 per cent.

It is the first time the Central Bank has increased its key policy rate since the summer of 2008, and is also the first European Central Bank to do so after the global economic crisis hit the world's financial markets.

Bank Governor Svein Gjedrem justified the increase by pointing out that the inflation in Norway has been slightly higher than expected, and that unemployment here is considerably lower than previously projected.

- The global economy is in a deep downturn, but there are signs of renewed growth. Activity in the Norwegian economy has picked up more rapidly than expected. The Executive Board considered the alternative of increasing the key policy rate at the previous monetary policy meeting. Developments indicate that it is appropriate to raise the key policy rate now, Governor Gjedrem says.

He said the Executive Board’s strategy is that the key policy rate should be in the interval 1¼ - 2¼ per cent in the period to the publication of the next Monetary Policy Report on 24 March 2010, unless the Norwegian economy is exposed to new major shocks.

- The analyses in Monetary Policy Report 3/09 indicate that the key policy rate should thereafter be raised gradually, says Governor Gjedrem. 

(NRK/Press release)

Rolleiv Solholm