Governor Øystein Olsen presented clean cut, 0.25 percentage points below Norges Bank press conference on Thursday morning.
Thus, the key rate down 1.25 percent.
The policy rate has never been lower than it is now, but it was at the same level throughout the summer and fall of 2009, the year after the financial crisis hit the world.
– Oil prices have fallen sharply and the prospects for growth in the Norwegian economy is weakened. Therefore, the interest rate down, says Olsen said in a statement.
More expensive euro, dollar and Swedish crown
krone immediately reacted to the decision, and minutes after 10 o’clock it looks like this:
- The euro cost 9.02 million (against 8.88 before the meeting)
- An American dollar cost 7.26 (7.13 before meeting)
- British Pound costs 11.39 (11.18 before the meeting)
- 100 Swedish kronor costs 96.43 (94.94 before the meeting)
The euro has not been more expensive since the summer of 2009.
Here is more of Norges Bank Justification:
“The world economic recovery remains moderate, and uncertainty about future developments is great. Here at home, the growth outlook weakened. Activity in the petroleum industry declines, and the sharp fall in oil prices will probably reinforce this trend. It will have repercussions for the rest of the economy and unemployment may rise somewhat ahead. Meanwhile, the krone weakened a lot. It dampens the impact on the Norwegian economy and help keep inflation up. “
” Here it is “precautionary” that apply “
Chief Economist Øystein Dørum DNB Markets not expecting rate cuts and commenting the decision as follows:
– When the cut ie Norges Bank nonetheless. The rationale is obvious: Weaker growth in Norway next year. Here it is “precautionary” that apply, he writes on Twitter.
In an article in Dagens Næringsliv Thursday wrote Dørum that Norges Bank should cut interest rates, but rather let the cooling of the economy ministry. Nor had he seen that Finance Jensen (FRP) did use fiscal policy to stem the oil brake.If Jensen uses more oil money, it will contribute to economic growth.
50-50 chance 1 percent rate
– The analysis in the monetary policy report we present today indicates a discount rate of 1.25 percent or lower until the end of 2016, says Olsen.
He estimates that there are 50-50 chance of interest rate cut yet again in 2015, ie to 1 percent.
The central bank signaled that it will hardly stir interest rate for the next three months, “unless the Norwegian economy is exposed to new major shocks. “
– No crisis
On a question from the press, clarifies Olsen that he will not say it’s a crisis in the Norwegian economy.
– But there is a restructuring going on in the oil sector. It is quite extensive in the next two to three years. There are large numbers, and the ripples in the rest of the economy. We envision weak growth prospects next year, and moderate growth prospects year thereafter. One should use words like “crisis” with caution.
Lower wage growth
Along with today’s interest rate decision, Norges Bank published Thursday’s fourth and last Monetary Policy Report. Where predicts the central bank about the future:
| Change in%, year to year | 2014 | 2015 | 2016 | 2017 |
| Price growth (CPI-ATE) | 2.5 | 2.5 | 2.75 | 2.5 |
| Lønnsvekst | 3,5 | 3,25 | 3,5 | 4 |
| BNP-vekst | 2 | 1,25 | 1,75 | 2,25 |
| Registered unemployment | 2.75 | 3 | 3.25 | 3 |
| Styringsrente | 1,5 | 1,25 | 1,25 | 1,5 |
| Boligpriser | 6,5 | 5 | 3 | 2,5 |
| Oil Level ($ per barrel) | 100 | 73 | 78 | 81 |
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