Present:

Executive Board:
Øystein Olsen, Jon Nicolaisen, Egil Matsen, Kjetil Storesletten, Karen Helene Ulltveit-Moe, Kathryn M. Baker, Steinar Juel and Kristine Ryssdal

Alternates:
Arne Hyttnes and Kristine Landmark

Employee representatives:
Mona H. Sørensen (items 69-71) and Kjersti-Gro Lindquist (items 69-71)

Office of the Supervisory Council:
Jan Frode Jakobsen (items 65-67)

Management:
Ørjan Agdesteen (items 69-70), Ida Wolden Bache (items 62-64), Alexander Behringer (items 69-70), Henrik Borchgrevink (item 62), Bjarne Gulbrandsen (items 62-71), Jane Haugland (items 69-70), Torbjørn Hægeland (items 62-64 and 66-67), Per Espen Lilleås (items 62-64), Kathrine Lund (item 65), Runar Malkenes (items 62-64 and 69-71), Nina Larsson Midthjell (items 62-64), Hanne Nesteby (items 69-70), Kyrre Nilsen (items 62-71), Arne Osnes (items 62-64), Marianne Sturød (items 62-64), Anders Svor (item 65), Ingunn Valvatne (items 66-67), Leif Veggum (item 67), Birger Vikøren (items 68-71), Kjetil Watne (item 66), Sindre Weme (items 62-64) 

There were no comments on the meeting notice and agenda.

Item 62/2019 Advice on the countercyclical capital buffer 2019 Q1

Discussion documents:

a. STRICTLY CONFIDENTIAL memo from Financial Stability of 19 March 2019

b. Presentation by Financial Stability 

Jon Nicolaisen provided an update on the basis for the recommendation to the Ministry of Finance on the countercyclical capital buffer. The basis for the recommendation is to be presented in Monetary Policy Report 1/19 (cf. item 63/2019).

In its discussions, the Executive Board emphasised the build-up of financial imbalances over a long period. Household debt is high and has long risen faster than income. Household debt growth has recently slowed somewhat. Enterprises have ample access to credit. Housing market activity is high, but house price inflation is moderate. There are signs that the rapid rise in CRE prices may slow. Bank profitability is solid and losses are low, and banks have ample access to wholesale funding.

The Executive Board has decided to advise the Ministry of Finance to keep the countercyclical capital buffer rate at 2.5 percent from the end of 2019. The decision was unanimous.

Item 63/2019 Monetary Policy Report with financial stability assessment 1/19

Discussion document:
STRICTLY CONFIDENTIAL memo from Monetary Policy of 19 March 2019

Jon Nicolaisen gave a briefing on some adjustments made to the report after the Executive Board’s meeting on 13 March 2019.

The Executive Board discussed the economic outlook, the monetary policy stance and the need for a countercyclical buffer at the banks. The Executive Board approved the draft “Executive Board’s Assessment” (cf interest rate decision in item 64/2019).

Item 64/2019 The current monetary policy outlook
Norges Bank’s policy rate – 20 March 2019

Discussion documents:
a. STRICTLY CONFIDENTIAL memo from Monetary Policy of 19 March 2019

b. Report from the meeting between the Ministry of Finance and Norges Bank on 22 January 2019

c. Presentation by Monetary Policy

Jon Nicolaisen presented a review of economic developments since the previous Executive Board meeting with particular emphasis on developments in money, foreign exchange and capital markets.

In its assessment, the Executive Board noted that monetary policy is expansionary. The Norwegian economy is expanding at a solid pace, and capacity utilisation now appears to be slightly above a normal level. Underlying inflation is a little above the inflation target. The uncertainty surrounding global developments and the effects of monetary policy suggests a cautious approach to interest rate setting. Overall, the outlook and the balance of risks imply a gradual interest rate increase ahead.

The upturn in the Norwegian economy appears to be stronger than anticipated earlier. On the other hand, there are prospects for weaker external growth and lower foreign interest rates. The policy rate forecast indicates a slightly faster rate rise in 2019 and a somewhat lower policy rate further out than projected in the previous Report. With this path for the policy rate, inflation is projected to be close to target in the years ahead, at the same time as unemployment remains low. The policy rate path will be adjusted in response to a change in economic prospects.

The Executive Board decided to raise the policy rate by 0.25 percentage point to 1.0%. The Executive Board’s current assessment of the outlook and balance of risks suggests that the policy rate will most likely be increased further in the course of the next half-year. The decision was unanimous.

Item 65/2019 Government debt management 2018 – annual report

Discussion document:
Memo from Markets and ICT of 12 March 2019

Since 1 January 2015, Norges Bank has been responsible for the management of government debt within the framework of a mandate laid down by the Ministry of Finance. Under the mandate, the Bank is to prepare an official annual report on its management of government debt.

Anders Svor presented the report and key elements of its preparations in 2018.

The Executive Board discussed the matter and took note of the annual report on government debt management in 2018. The report is to be submitted to the Ministry of Finance for information prior to publication.

Item 66/2019 Annual report on Norges Bank’s settlement system in 2018

Discussion document:
Memo from Financial Stability of 11 March 2019

Kjetil Watne presented the main elements of the report, including the risk outlook and risk-reduction measures.

The Executive Board took note of the annual report on Norges Bank’s settlement system for 2018.

Item 67/2019 Annual report on notes and coins for 2018

Discussion document:
Memo from Financial Stability of 7 March 2019

Leif Veggum presented developments and the main elements of the report.

The Executive Board took note of the annual report on notes and coins for 2018.

Item 68/2019 Briefing on relevant matters 

The Governor and Deputy Governors gave a briefing on relevant matters.

Item 69/2019  Minutes of the Executive Board meeting of 13 March 2019

Discussion document:
Draft minutes 

The Executive Board approved the minutes of its meeting of 13 March 2019.

Item 70/2019   Negotiations with Finanstilsynet (Financial Supervisory Authority of Norway) regarding its move from Norges Bank’s building at Bankplassen 2.

Discussion document:
Memo from Corporate and Shared Services of 14 March 2019 

The Governor and Jane Haugeland presented the discussion document.

The Executive Board discussed the matter and took note that the Governor will establish a delegation to negotiate a framework for an agreement with Finanstilsynet regarding its move from Norges Bank’s building at Bankplassen 2 before the termination of the lease agreement. The Governor will return to the Executive Board for the approval of the budget conditions for such an early move, before the negotiations are concluded.

Item 71/2019  Any other business

There was no other business.

The following were distributed for information together with the discussion documents:

• Developments in the labour share
  Memo from Monetary Policy of 14 March 2019
• Programme for the Executive Board’s seminar on 3-4 April 2019
  Memo from the General Secretariat of 18 March 2019
• Report from the Audit Committee meeting of 4 February 2019