Norges Bank

Circular 9/2016

Change to floating interest rate for Norges Bank’s market operations from 2017

From 2017, Norges Bank will ordinarily conduct market operations at a floating interest rate. The interest rates on F-loans and F-deposits have previously been fixed for the entire maturity of the operation, limiting the opportunity to conduct market operations that span monetary policy meetings. The change to floating interest rates allows F-loans and F-deposits to extend beyond the dates for monetary policy meetings, so that market operations can be better adjusted to fluctuations in structural liquidity.

As previously, interest rates in Norges Bank's market operations will be determined by multi-price auction. In a multi-price auction, banks submit bids for a desired amount and interest rate. Banks will submit interest rate bids in the same manner as before. For F-loans, banks must submit an interest rate bid that is higher or equal to the key policy rate on the auction date. For F-deposits, banks must submit an interest rate bid that is lower than or equal to the key policy rate on the auction date. Norges Bank decides the aggregate amount of the allotment. Banks' interest rate bids are ranked in descending order. Banks that place bids within the aggregate amount will be awarded an amount at the interest rate submitted. What is new is that if the key policy rate is changed during the maturity of the operation, banks' allotment rate will change accordingly, from the same date as the change in the key policy rate.

Please note that the change to floating interest rates does not entail other changes to liquidity management. As previously, dates and maturities for F-loans and F-deposits will be adjusted to developments in structural liquidity.

If you have any questions, please contact us on +47 22 31 71 70 or at

Published 7 November 2016 09:30