The upturn in the world economy remains moderate and there is considerable uncertainty surrounding developments ahead. Growth prospects for the Norwegian economy have weakened. Activity in the petroleum industry is softening and the sharp fall in oil prices is likely to amplify this tendency. This will have spillover effects on the wider economy and unemployment may edge up ahead. At the same time, the krone has depreciated markedly, which is helping to dampen the effects on the Norwegian economy and underpin inflation.

"The analysis in the Monetary Policy Report presented today implies a key policy rate of 1¼ percent, or somewhat lower, in the period towards the end of 2016", says Governor Øystein Olsen.

Capacity utilisation in the mainland economy will probably decline to a further extent than projected earlier, but is expected to increase again towards the end of the projection period. Inflation is projected to lie close to 2.5 percent in the coming years.

The Executive Board decided at its meeting that the key policy rate should lie in the interval ¾–1¾ percent in the period to the publication of the next Report on 19 March 2015, unless the Norwegian economy is exposed to new major shocks.

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