Norway keeps rates at record low to back recovery from oil slump

By Sveinung Sleire on 10/26/2017

OSLO (Bloomberg) -- Norway’s central bank decided to keep its benchmark rate unchanged at a record low to support an economic recovery as the country exits the worst downturn in its oil industry in a generation.

The central bank left the key deposit rate at 0.5% on Thursday, without giving updates on its forecasts since it’s a so-called interim meeting. There will also be no press conference to offer an explanation, though Governor Oystein Olsen is scheduled to speak at 11 a.m. in Oslo.

“The outlook and the balance of risks for the Norwegian economy do not appear to have changed substantially since the September Report,” Olsen said in a statement.

The economy of western Europe’s largest crude producer is recovering from a protracted slump in its bellwether oil industry. But with inflation well below target and the housing market cooling rapidly, the central bank indicated at its September policy meeting that its first tightening since 2011 would likely not come until 2019.

It’s also unable to tighten too much on its own, since stimulus is still running full throttle in Norway’s key trading partners, Sweden and the euro zone. Economic data since September has been at the lower end of the central bank forecast and price growth is about a percentage point below the 2.5% target.

The central bank will give its next guiding on monetary policy at the Dec. 14 rate decision.

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