­The effects of the fall in oil prices and the decline in oil investment on the Norwegian economy are gradually becoming evident. Going forward, household consumption and private sector investment are expected to be lower than previously projected. On the other hand, an expansionary fiscal policy will support demand for goods and services. Overall, there are prospects that growth ahead will be somewhat weaker than anticipated. Unemployment is expected to rise slightly more than projected in the September Monetary Policy Report.

Monetary policy is expansionary and is supporting the restructuring of the Norwegian economy. The krone has depreciated and inflation has picked up. A lower key policy rate may increase the risk of a more rapid rise in real estate prices and debt. Uncertainty as to the effects of the monetary policy stance suggests a cautious approach to interest rate setting.

"An overall assessment of the outlook and balance of risks led the Executive Board to conclude that the key policy rate should be kept unchanged at this meeting. If economic developments are broadly in line with projections, the key policy rate may be reduced in the first half of 2016", says Governor Øystein Olsen.

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