"Consumer price inflation has been somewhat lower than expected in the past two months and it appears that growth in the Norwegian economy will be somewhat lower in the period ahead than projected earlier. On the other hand, the krone has depreciated considerably. On the basis of an overall assessment, the key policy rate was left unchanged at this meeting", says Deputy Governor Jan F. Qvigstad.

The moderate upturn in the world economy is continuing. At the same time, policy rates abroad are now expected to stay on hold for even longer. Growth prospects for the Norwegian economy have weakened somewhat. House prices have declined recently, while household debt growth remains high. Unemployment is still low, but wage growth may be somewhat lower ahead than projected earlier. At the same time, the krone is weaker than assumed. On balance, there are prospects that consumer price inflation will be somewhat lower than previously projected.

"The analyses imply that the key policy rate should be held at the current level in the period to summer 2015 and be increased gradually thereafter. The increase in the key policy rate is now forecast to occur one year later than projected in September", says Deputy Governor Jan F. Qvigstad.

The projections show that growth in the Norwegian economy will edge up further ahead. Capacity utilisation is expected to remain close to a normal level and inflation is projected to move up towards 2½ percent.

At its meeting, the Executive Board decided that the key policy rate should be in the interval 1%–2% in the period to the publication of the next Report on 27 March 2014, unless the Norwegian economy is exposed to new major shocks.

Charts and background material