Growth in consumer prices has been less than expected and inflation is projected to remain around 1 ½ per cent until next summer. At the same time the Norwegian economy continues to grow moderately, says Governor Svein Gjedrem. In the world economy, the uncertainty is still large. The expected rise in key interest rates are pushed further out in time, and long-term interest rates are very low. – An overall assessment indicates that we keep interest rates unchanged at this meeting, “said Gjedrem.
The analysis presented in the Monetary Policy Report 3 / 10 suggests that the key rate is kept at the current level over the next few quarters and then increased gradually to a more normal level. Developments since June suggests to increase interest rates no later than projected in the previous report. The Executive Board's strategy is that the policy rate should be kept in the interval 1 ½ – 2 ½ per cent till 16 March 2011, unless the Norwegian economy is exposed to new major shocks.
Finance Minister's comments on Norges Bank's decision
– I take Norges Bank's decision very intelligent. The decision was expected among market players. I note also that Norges Bank's forecast of future trends in the key rate has been adjusted somewhat in the new monetary policy report. Norges Bank justifies downward revision including the prospect of lower inflation ahead, and it is estimated that interest rates will be kept low longer than previously assumed, said Finance Minister Sigbjørn Johnson.
The Finance Minister, Johnson also suggested that there is a considerable uncertainty in the global economy and several European countries face major challenges with regard to government budgets and debt, while Norway manages to keep itself out of this turmoil.
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