“Inflation has been slightly higher than expected and there are prospects that inflation will move up further. We give weight to preventing the higher rate of inflation from becoming entrenched. It is therefore appropriate to raise the interest rate now”, says Deputy Governor Jan F. Qvigstad. “The upturn in Norway is entering a new phase. Inflation has been low and growth high for a long period. It now appears that inflation will be somewhat higher and that growth will be lower”, says Qvigstad.

The analysis in Monetary Policy Report 2/08 indicates that the key policy rate will remain at the current level, or perhaps somewhat higher, in the coming year. The Executive Board’s strategy is that the key policy rate should be in the interval 5¼ - 6¼ per cent in the period to the publication of the next Report on 29 October, unless the Norwegian economy is exposed to major shocks.

“Even though growth is moderating both in Norway and abroad, activity in the Norwegian economy will remain high for a period ahead. Unemployment is at a historically low level, inflation is picking up and wages are rising rapidly”, says Jan F. Qvigstad.
 
For more information, see the attached document “The Executive Board’s monetary policy decision – background and general assessment”.

• Charts and background material