The Executive Board of the Norwegian Central Bank (Norges Bank) surprised many analysts and decided Wednesday to increase the key policy rate by 0.25 percentage point to 1.75 per cent.
A survey showed that 13 out of 15 leading economists had expected the Board to keep the rate unchanged at least until its February meeting.
- Activity in the Norwegian economy has picked up and inflation is close to 2.5 per cent. Growth has revived in the US and in most European countries. Activity continues to increase in Asia. On the whole, the upturn abroad and in Norway has, as expected, gained a firmer foothold and the outlook for next year seems less uncertain. The Executive Board has therefore decided to raise the key policy rate now, says Deputy Governor Jan F. Qvigstad.
Growth in private consumption is strong and house prices are rising sharply. The level of unemployment remains relatively low. On the other hand, corporate and petroleum investment may fall somewhat more sharply than expected. The global economy is recovering, but prospects remain uncertain, particularly in countries with large government deficits.
- The Executive Board considered the alternative of keeping the key policy rate unchanged, but interest rates are low and the October increase in the key policy rate has had a limited impact on bank lending rates. On the basis of an overall assessment, the Executive Board decided to increase the key policy rate at this monetary policy meeting. The Board still holds the view that the key policy rate should be in the interval 1¼ - 2¼ per cent in the period to end-March, says Deputy Governor Jan F. Qvigstad.
(NRK/Press release)
Rolleiv Solholm
The Executive Board of the Norwegian Central Bank (Norges Bank) has decided to keep the key policy rate unchanged at 1.5 percent. (Photo Norges Bank Deputy Governor Jan Qvigstad)
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