Norway’s central bank, Norges Bank, kept its key policy rate at 2.25%, and signaled no changes. The Bank’s Deputy Governor, Jan F. Qvigstad, said: “The prospects for the world economy have weakened considerably in the course of summer. External developments and the turbulence in financial markets are also affecting the domestic outlook. Against this background, we have chosen to leave the key policy rate unchanged at this meeting,” and further noted: “The turbulence and uncertainty abroad, combined with lower inflation and weaker prospects at home, suggest that the key policy rate should be kept low for a longer period.”
At its previous meeting the Bank held the key policy 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. The Norwegian krone has gained about 3% against the US dollar this year, while the USDNOK exchange rate last traded around 5.65
