Advice on the countercyclical capital buffer 2019 Q4
Norges Bank has advised the Ministry of Finance to keep the countercyclical capital buffer at 2.5 percent from the end of 2019.
The current countercyclical capital buffer of 2.0 percent and the decision to increase the buffer to 2.5 percent reflect the build-up of financial imbalances over a long period. Household debt-to-income ratios are high and property prices are high.
In Norges Bank’s assessment, financial imbalances are no longer building up and there are now some signs that they are receding. Household debt growth has gradually slowed and is now close to growth in disposable income. Moderate house price inflation in recent years has reduced housing market vulnerabilities. The slower pace of debt growth and house price inflation may reflect bank credit standards requirements and interest rate increases over the past year. Enterprises and households have ample access to credit. Banks’ have good profitability, low losses and ample access to wholesale funding.
“Norges Bank has advised the Ministry of Finance to keep the countercyclical capital buffer at 2.5 percent from the end of 2019", says Governor Øystein Olsen.
The Ministry of Finance decided today to follow Norges Bank's advice.
- Ministry of Finance press release
- Norges Bank’s advice is issued in the letter: Advice on the countercyclical buffer 2019 Q4
- The decision basis for Norges Bank’s advice is presented in Section 6 of the December 2019 Monetary Policy Report
- Norges Bank’s framework and inndicators for advice on the countercyclical capital buffer
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