- Inflation has increased over the past six months and underlying inflation is now somewhat higher than 2.5 per cent, says Governor Svein Gjedrem.

Capacity utilisation in the Norwegian economy is still high, but as expected there are signs that economic growth is moderating. Growth in household spending is slowing. Building starts have declined. Developments in the global economy are divergent, but there are lower growth prospects. Rising energy and food prices are fuelling inflation in many countries, and interest rate expectations abroad have increased.

The strategy in Monetary Policy Report 1/08 is that the key policy rate should be in the interval 5 – 6 per cent in the period to the publication of the next Report on 25 June, unless the Norwegian economy is exposed to major shocks. 

- The increase in inflation and the prospect of higher inflation suggest a further increase in the key policy rate.  Against the background of the turbulence in financial markets, high premiums in the money market and uncertainty about the global economic outlook, it is nevertheless appropriate to leave the key policy rate unchanged now, says Governor Svein Gjedrem.

For more information, see “The Executive Board’s monetary policy decision – background and general assessment”.