Norway Keeps Benchmark Rates Unchanged as Oil Crisis Abates

(Bloomberg) -- Norway's central bank kept rates unchanged at a record low and said it was “sticking to plans” even as inflation and the krone have come in weaker than forecast.

The benchmark deposit rate was held at 0.50 percent, Norges Bank said in Oslo on Thursday. None of the 25 analysts surveyed by Bloomberg had expected any change. Since the meeting is in between Monetary Policy Reports, the bank gave few new signals, though highlighted that inflation has been weaker than expected and that house price gains have slowed, all potentially pulling rates downward.

“Since March things have developed according to the picture we saw, so we stick to the plan,” Governor Oystein Olsen says in an interview after a briefing in Oslo. The bank in March pushed any projected rate increases well into 2019 and forecast a trough of 0.4 percent all the way to the end of December 2018.

After a three-year slump caused by a global oil glut, Norwegian economic growth is reviving and unemployment is falling. The central bank's regional network survey has also added to evidence that the momentum has changed, with output expectations for the coming six months climbing back to levels not seen since the oil shock of mid-2014.

The krone slid 0.1 percent to 9.4289 per euro as of noon local time.

While the bank has “registered” a weaker than expected krone, the currency fluctuates and its “too early to conclude on that,” Olsen said.

The country's red-hot property market has shown signs of cooling, although household borrowing has continued to climb at its fastest pace since 2014, adding to central bank concerns about financial instability. A report also released on Thursday showed house prices were unchanged in April, on a seasonally adjusted basis.

At the same time, core inflation has fallen to well below the central bank's 2.5 percent target, coming in at 1.7 percent in March, while the Norwegian krone has also been weaker than what the central bank had expected.

The bank announced it will start releasing minutes from its rate meetings and also expand the number of meetings to eight each year from six now.

To watch full press briefing, click here.

To contact the reporter on this story: Sveinung Sleire in Oslo at ssleire1@bloomberg.net.

To contact the editors responsible for this story: Jonas Bergman at jbergman@bloomberg.net, Nick Rigillo, Stephen Treloar