Positive IMF report on Norway's economyA mission from the International Monetary Fund (IMF) presented its views on the Norwegian economy and Norwegian economic policy. The mission is in Oslo as part of its article IV-consultation with Norway. The IMF concludes that the Norwegian economy continues to perform well amidst a turbulent global economy. Output is now higher than before the financial crisis in 2008 and unemployment remains low. Looking ahead, the IMF mission expects the moderately paced growth in the mainland economy to continue, driven mainly by domestic demand. The statement emphasizes that Norway is better placed than many in Europe to weather an intensification of eurozone stress. The Norwegian economy is nevertheless vulnerable to loss in confidence, lower export demand, reduced oil prices, and to strains in the international market for bank financing. "I am pleased that the IMF broadly supports the economic policies implemented by the Norwegian government. The mission’s statement is an important contribution to our domestic debate on economic policies”, says Finance Minister Sigbjørn Johnsen. "Norway cannot insulate itself from what is happening abroad. The best protection is to keep our own house in order. I agree with the IMF that a tight fiscal stance will protect our competitiveness, and allow monetary policy to be our first line of defense if international conditions worsen, " says Finance Minister Johnsen. In the statement, the IMF highlights the risks stemming from high household debt and elevated house prices. The mission argues that macroprudential policies should be employed to reduce these risks, and points to i.a. the Financial Supervisory Authority’s guidelines for mortgages, higher risk weights for bank’s mortgage portfolios, and strengthening of bank capital through restraining dividends and remuneration. The mission also gives advice on how the institutional framework for macroprudential policy may be organized in Norway. "It is important to strengthen the surveillance of the whole financial system to promote financial stability. The Ministry of Finance aims to formalize Norway’s framework for macroprudential policies by mid-2012", says the Norwegian Finance Minister. (NRK/Press release)
Wednesday, 23 November 2011 08:33
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As expected by most analysts, the Executive Board of the Norwegian Central Bank (Norges Bank) has decided to keep the key policy rate unchanged at 1.5 percent.
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The Governor of the Norwegian Central Ban, Øystein Olsen, surprised most experts when he announced that the Bank's Executive Board had decided to reduce the key policy rate by 0.25 percentage point to 1.50 per cent.
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