Financial imbalances have built up, owing to a persistent rise in household debt ratios and high property price inflation over a long period. Low house price inflation will have a dampening impact on household debt accumulation, but it will take time for household sector vulnerabilities to recede.

"Household credit growth remains high, but the decline in house prices in 2017 has reduced the extent of a fall in the housing market", says Governor Øystein Olsen.

Bank losses are low and banks have built up capital buffers that can absorb losses in the event of a downturn in the Norwegian economy. Creditworthy enterprises appear to have ample access to credit.

In line with Norges Bank's advice, the Ministry of Finance decided today to keep the buffer rate unchanged at 2 percent from the end of 2017.

• Ministry of Finance press release
• Norges Bank's advice is issued in the letter: Advice on the countercyclical capital buffer 2017 Q4
• The decision basis for Norges Bank's advice is presented in Section 5 of the December 2017 Monetary Policy Report