Since September 2018, the policy rate has been raised gradually. The monetary stance has become less expansionary. Inflation is close to the inflation target, and capacity utilisation is somewhat above a normal level. The krone depreciation will likely push up inflation somewhat, while it seems that wage growth will remain moderate ahead. Growth in the mainland economy is slowing. With a policy rate close to the current level, there are prospects that inflation will remain close to the inflation target, and that capacity utilisation will decline towards a normal level.

In the Executive Board’s assessment, the overall outlook and balance of risks suggest a policy rate at close to the current level ahead. The policy rate forecast is broadly unchanged from the September Report. A weaker-than-projected krone implies in isolation a higher policy rate path. On the other hand, the upturn in the Norwegian economy appears to be a little more moderate than previously assumed. In isolation, this suggests a slightly lower rate path. Should the economic outlook or balance of risks change, interest rate developments may also differ from the forecast.

“The Executive Board’s current assessment of the outlook and balance of risks suggests that the policy rate will most likely remain at the current level in the coming period”, says Governor Øystein Olsen.