Norges Bank

The Executive Board's monetary policy decision – background and general assessment

Meeting 6 May 2015

Economic growth among Norway's trading partners is moderate, but there are wide variations across countries. So far, growth abroad appears to have been slightly weaker than projected in the March 2015 Monetary Policy Report, but there is little change in the outlook. Inflation in most of Norway's trading partners is still very low. Policy rates are close to zero and are negative in some countries. Market expectations concerning policy rates abroad for the period ahead have fallen somewhat.

Risk premiums in Norwegian money market rates have risen and have been slightly higher than assumed in March. Bank lending rates have been in line with expectations.

Oil prices have risen more than expected and have recently been around USD 65 per barrel. So far in the second quarter, the krone exchange rate has been close to the March projection.

Growth in the Norwegian economy appears to be broadly in line with the projections in the March Report. A phone survey of a limited sample of contact enterprises in Norges Bank's regional network indicates that developments in growth and employment have been approximately as expected by the contacts in January. Household goods consumption has risen somewhat more than projected in the March Report. Developments in registered unemployment have been as expected, while LFS unemployment has risen more. This year's wage settlement suggests so far that wage growth may be somewhat lower than previously projected. House prices continue to rise and household debt has increased more than expected.

Inflation has been approximately in line with the projections in the March Report. The year-on-year rise in the CPI-ATE was 2.3 percent in March. Prices for imported consumer goods rose more than assumed in the March Report, while the rise in prices for domestically produced goods and services was lower than anticipated.

The key policy rate is set with a view to keeping inflation close to 2.5 percent over time. At its meeting on 18 March, the Executive Board decided to keep the key policy rate unchanged at 1.25 percent. At the same time, if developments in the economy proved to be broadly as projected, there were prospects that the key policy rate would be lowered in the second quarter.

So far, developments in the Norwegian economy have been broadly as expected. Consumer price inflation is close to 2.5 percent. Lower wage growth is weakening inflationary forces further out. On the other hand, household demand remains buoyant and oil prices have risen. Further developments in house prices and debt are still subject to uncertainty. At the same time, the risk of a pronounced downturn in the Norwegian economy appears to have diminished somewhat. Following an overall assessment of new information and the risk outlook, the Executive Board decided to keep the key policy rate unchanged at this meeting. At the same time, there are still prospects that the key policy rate will be lowered in June.


The key policy rate is kept unchanged at 1.25 percent.

Published 7 May 2015 10:00