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Norway Keeps Benchmark Rates Unchanged as Oil Crisis Abates

Norway’s central bank kept interest rates unchanged at a record low amid signs that rising oil prices are supporting a recovery in western Europe’s largest crude producer.

The benchmark deposit rate was held at 0.50 percent, Norges Bank said in Oslo on Thursday. None of the 25 analysts surveyed by Bloomberg had expected any change to the rate.

“The outlook and the balance of risks for the Norwegian economy do not appear to have changed substantially since the March Report,” Governor Oystein Olsen said in a statement. “The key policy rate has therefore been kept unchanged at this meeting.”

After a three-year slump caused by a global oil glut, Norwegian economic growth is reviving and unemployment is falling. The central bank’s regional network survey has also added to evidence that the momentum has changed, with output expectations for the coming six months climbing back to levels not seen since the oil shock of mid-2014.

Since Thursday’s meeting is in between Monetary Policy Reports, the bank gave few signals on whether its outlook for rates has changed. It confirmed that the krone and inflation has been weaker than expected and that house price gains have slowed.

The krone slid 0.3 percent to 9.4438 per euro as of 10:39 a.m.

The country’s red-hot property market has shown signs of cooling, although household borrowing has continued to climb at its fastest pace since 2014, adding to central bank concerns about financial instability.

At the same time, core inflation has fallen to well below the central bank’s 2.5 percent target, coming in at 1.7 percent in March, while the Norwegian krone has also been weaker than what the central bank had expected.

The bank announced it will start releasing minutes from its rate meetings and also expand the number of meetings to eight each year from six now.

Source: www.boomberg.com  |  Last Updated: 4-May-2017 at 9:23 AM AM UTC

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