Wednesday, August 10, 2011

Norges Bank Keeps Interest Rate at 2.25%

Norway's central bank, Norges Bank, maintained its key policy rate at 2.25%, and signaled further rate increases.  The Norges Bank Governor, Øystein Olsen, said: "The decision must especially be seen against the background of the recent flare-up in financial market turbulence and clear signs of weaker growth internationally,"... and "An overall assessment of the outlook and the balance of risk suggests that the key policy rate be left unchanged at this meeting,".

At its previous meeting the Bank held the interest rate unchanged, after increasing the interest rate by 25 basis points to 2.25% in March.  The Bank expects inflation to remain relatively low, but to progress towards the 2.5 percent inflation target (but with due upside inflation risks); Norway reported annual inflation of 1.6% in July, up from 1.3% in June, 1.6% in May, and 1.3% in April this year.  Core inflation in July was 1.2%.


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