The moderate economic upswing among Norway's trading partners is continuing. There are nevertheless prospects that policy rates abroad will be raised at an even later point in time, primarily reflecting weaker inflation expectations for Europe. Economic growth in Norway has been moderate, broadly in line with that projected in the March 2014 Monetary Policy Report, but growth may prove to be somewhat lower than projected earlier in the period ahead.

"The analyses imply that the key policy rate be held lower longer than previously projected. There are prospects that the key policy rate will remain at about today's level to the end of 2015, followed by a gradual rise. A further weakening of the outlook for the Norwegian economy may warrant a reduction in the key policy rate", says Governor Øystein Olsen.

The projections for the Norwegian economy show that capacity utilisation may edge down in the coming year, rising gradually thereafter. Inflation is projected to be somewhat below, but close to, 2.5% in the years ahead.

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 18 September 2014, unless the Norwegian economy is exposed to new major shocks.

Background material and charts