The upturn in the Norwegian economy is continuing. Capacity utilisation appears to be close to a normal level and is likely rising faster than expected earlier. Underlying inflation is lower than the inflation target, but rising capacity utilisation implies an increase in price and wage inflation further out.

Monetary policy is expansionary. The outlook for the Norwegian economy suggests that it will soon be appropriate to raise the key policy rate. Uncertainty surrounding the effects of a higher interest rate suggests a cautious approach. As in March, the overall outlook and the balance of risks imply a gradual rate rise in the years ahead.

"The Executive Board's current assessment of the outlook and balance of risks suggests that the key policy rate will most likely be raised in September 2018", says Governor Øystein Olsen.

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