“Growth prospects for the Norwegian economy have weakened, and inflation is projected to abate further out. The Board has therefore decided to lower the key policy rate now”, says Governor Øystein Olsen.

Growth in the Norwegian economy is likely to remain low for a longer period than projected earlier owing to the fall in oil prices through summer. Oil investment is expected to fall to a further extent than projected in June, and lower demand for goods and services from the petroleum sector will reduce activity in other parts of the economy. On the other hand, a weaker krone will contribute to strengthening the profitability of export and import-competing firms. Unemployment is projected to continue to edge up.

House price inflation has been a little higher than projected, albeit with wide regional dispersion. Household debt has continued to grow at a faster pace than income.

The krone depreciation has pushed up consumer price inflation. Low wage growth is keeping down cost growth, and inflation will edge down as the effects of the krone depreciation unwind.

“The current outlook for the Norwegian economy suggests that the key policy rate may be reduced further in the coming year”, says Governor Øystein Olsen. 

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