Key policy rate unchanged at 2 per cent
Norges Bank’s Executive Board decided today to keep the key policy rate unchanged at 2 per cent. The Executive Board’s current assessment is that the key policy rate should be increased before the end of the first half-year of 2011.
The upturn in the Norwegian economy has gained a firm footing and market interest rates abroad have risen. There are prospects of relatively high growth in output and employment in the years ahead. Inflation is projected to gradually pick up towards the target of 2.5 per cent. “The projections in the March 2011 Monetary Policy Report imply that the interest rate should gradually be raised towards a more normal level”, says Deputy Governor Jan F. Qvigstad.
“Should economic activity or inflation rise more than expected, the increase in the key policy rate may be more pronounced than currently envisaged. In the event of a marked slowdown in world economic growth, heightened financial turbulence abroad or a further appreciation of the krone, the increase in the key policy rate could be deferred further ahead”, says Qvigstad.
The Executive Board has decided that the key policy rate should be in the interval 1¾ −2¾ per cent in the period to the publication of the next Monetary Policy Report on 22 June 2011 unless the Norwegian economy is exposed to new major shocks.
For further information, see “The Executive Board’s assessment” in the March 2011 Monetary Policy Report (pdf)
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