Countercyclical capital buffer 2016 Q2
Norges Bank has advised the Ministry of Finance to keep the countercyclical capital buffer for banks unchanged. The decision basis for the Bank's advice is presented in the June 2016 Monetary Policy Report.
The persistent rise in household debt ratios and high property price inflation in recent years are signs that financial imbalances have built up. Growth in overall credit has edged down recently, while house price inflation has accelerated.
"Norges Bank's overall assessment of financial imbalances is little changed since March", says Governor Øystein Olsen.
Weak growth in the Norwegian economy may curb debt growth ahead in both the household and corporate sector. On the other hand, low interest rates may contribute to sustaining the high level of property price inflation and drive up household debt growth, increasing the risk of an abrupt decline in demand and future bank loan losses.
The buffer is set at 1 percent and will increase to 1.5 percent effective from 30 June 2016.
The Ministry of Finance decided today to keep the buffer rate unchanged. Ministry of Finance press release
Norges Bank's letter: Advice on the countercyclical capital buffer 2016 Q2
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