"The upturn in the Norwegian economy has gained a firm footing. Several other central banks have raised their key rates. The consideration of stabilising activity and inflation somewhat further ahead suggests that the key policy rate should be raised”, says Governor Øystein Olsen.

Inflation is low. This suggests that the key policy rate should be kept low. On the other hand, capacity utilisation in the economy is rising. There are prospects that inflation will pick up over the year ahead. “The analyses published in March suggested that the key policy rate should be raised gradually towards a more normal level. Developments since then have been approximately as expected. An overall assessment indicates that the key policy rate should be raised now”, says Olsen.

For further information, see The Executive Board’s monetary policy decision – background and general assessment and “The Executive Board’s assessment” in the March 2011 Monetary Policy Report.

• Charts and background material