“Underlying inflation is around 1½ per cent, approximately as projected. Both the consideration of bringing consumer price inflation up to target and the consideration of stabilising developments in output and employment imply a low key policy rate”, says Governor Øystein Olsen.

Activity in the global economy is increasing and commodity prices are rising, but the outlook for Europe remains highly uncertain. Interest rates abroad have risen since October, but are still low.

In Norway, the rise in house prices and consumer spending have picked up. The consideration of guarding against the risk of future financial imbalances that may disturb activity and inflation somewhat further ahead suggests that the key policy rate should not be kept low for too long. On the other hand, a strong krone may lead to inflation becoming too low. “An overall assessment of the outlook and the balance of risks suggests that the key policy rate be left unchanged at this meeting”, says Governor Olsen.

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

• Charts and background material