Norges Bank keeps rates on hold as widely expected, says NOK strength not a concern

Norges Bank's Executive Board has decided to keep the key policy rate unchanged at 0.50 percent as widely expected. The central bank has made no changes to its rate path. At its September meeting, Norges Bank held rates and also indicated that the key policy rate would most likely remain at that level in the period ahead.

In the press release Norges Bank noted that overall developments since September do not differ substantially from the projections in the September Monetary Policy Report. This implies that the key policy rate remains unchanged at this meeting.

At the same time, oil prices have increased somewhat more than assumed and the krone has appreciated and is stronger than projected in September. Norges Bank saw the strengthening as a result of higher oil price and that the effect on rates from stronger NOK is neutralized by higher oil prices.

Overall capacity utilisation in the Norwegian economy appears to be broadly as projected in September. House prices and household debt have risen somewhat more than projected. Consumer price inflation has been lower than expected while house price inflation is still high.