“Recent developments in the Norwegian economy have been broadly in line with expectations. Activity is rising moderately. Inflation has slowed and is now below 2 per cent,” says Governor Svein Gjedrem.
Global economic growth has been slightly stronger than expected, but the level of activity is still low in advanced economies. Turbulence related to public finances in several European countries has receded, but the outlook for the US economy is somewhat more uncertain.
“Considerations relating to both inflation and stable developments in output and employment imply that the interest rate should be kept low. The consideration of guarding against the risk of future financial imbalances that may disturb activity and inflation somewhat further ahead suggests that the interest rate should be gradually brought closer to a more normal level,” says Gjedrem.
Finance Minister Welcomes Norges Bank's decision
– I find Norges Bank's decision to keep its key rate unchanged at 2.0 percent, wise. Interest rate decision is in line with Norges Bank's signals on interest rate developments in the monetary policy report in June “said Finance Minister Sigbjorn Johnsen.
– There is still considerable uncertainty in the global economy. Many countries are struggling with huge budgetary deficits and high government debt and have to tighten fiscal policy in the coming years. What's happening outside of Norway is also important for the development of the Norwegian economy, says finance minister.
Key policy rate in Norway has been at 2 percent or lower since March 2009. Norges Bank has announced a gradual increase in key interest rates to a more normal level next year.