"The key policy rate forecast is little changed since the March Monetary Policy Report," says Governor Øystein Olsen.

Growth in the world economy is moderate, and oil prices have risen further since March. Financial markets have recently been marked by the uncertainty surrounding the outcome of the UK referendum on continued EU membership. Expected policy rates among trading partners have declined since the March Report. The krone has been stronger than anticipated.

Growth in the Norwegian economy is likely to remain weak in the coming period, even though the upswing in oil prices may reduce uncertainty and push up demand somewhat. Should the rapid rise in house prices persist, household vulnerabilities may increase. Inflation has for a period been higher than 2.5%, but lower wage growth and a somewhat stronger krone will weigh down on inflation ahead.

"There are still prospects that the key policy rate may be reduced in the course of the year," says Governor Olsen.

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