Norwegian Central Bank Retains Key Interest Rate

3/16/2011

 
(RTTNews) - Norway's central bank on Wednesday decided to retain the key policy rate at 2 percent for a seventh straight rate-setting session. But it signaled a rate hike is likely in the coming months.
In a statement, the central bank said the upturn in the Norwegian economy has gained a firm footing.
"The Executive Board's current assessment is that the key policy rate should be increased before the end of the first half-year of 2011," the Norges Bank said.
The central bank said inflation will remain low in the coming quarters and gradually pick up towards the target of 2.5 percent. In February, consumer price inflation slowed to 1.2 percent from 2 percent in January.
The executive board sees prospects for fairly strong growth in the Norwegian economy in the years ahead, driven by solid income growth, rising investment and high population growth.
"Should economic activity or inflation rise more than expected, the increase in the key policy rate may be more pronounced than currently envisaged," Norges Bank Deputy Governor Jan Qvigstad said.
"In the event of a marked slowdown in world economic growth, heightened financial turbulence abroad or a further appreciation of the krone, the increase in the key policy rate could be deferred further ahead."
Qvigstad said the central bank's latest assessment implies that the interest rate should gradually be raised towards a more normal level.