- Activity in the Norwegian economy has picked up and inflation is close to 2.5 per cent. Growth has revived in the US and in most European countries. Activity continues to increase in Asia. On the whole, the upturn abroad and in Norway has, as expected, gained a firmer foothold and the outlook for next year seems less uncertain. The Executive Board has therefore decided to raise the key policy rate now, says Deputy Governor Jan F. Qvigstad.

Growth in private consumption is strong and house prices are rising sharply. The level of unemployment remains relatively low. On the other hand, corporate and petroleum investment may fall somewhat more sharply than expected. The global economy is recovering, but prospects remain uncertain, particularly in countries with large government deficits.

- The Executive Board considered the alternative of keeping the key policy rate unchanged, but interest rates are low and the October increase in the key policy rate has had a limited impact on bank lending rates. On the basis of an overall assessment, the Executive Board decided to increase the key policy rate at this monetary policy meeting. The Board still holds the view that the key policy rate should be in the interval 1¼ - 2¼ per cent in the period to end-March, says Deputy Governor Jan F. Qvigstad.

For further information, see The Executive Board’s monetary policy decision – background and general assessment”

• Charts and background material