May 3, 2018 / 8:14 AM / a year ago

UPDATE 2-Norway central bank keeps key rate at 0.50 pct, outlook unchanged

(Adds detail, reactions, updates crown)

OSLO, May 3 (Reuters) - Norway’s central bank kept its key policy interest rate unchanged at a record low 0.50 percent on Thursday, as expected by all 15 economists polled by Reuters, and maintained its guidance.

The outlook and the balance of risks for the Norwegian economy do not appear to have changed substantially since the March rate meeting, the board of Norges Bank said in a unanimous decision.

“This was very much in line with expectations, nothing that would change the outlook for a hike in September,” said DNB Markets economist Jeanette Stroem Fjaere.

The bank in its March policy report called for a rate rise “after the summer”, which most economists polled by Reuters took to mean a hike was pencilled in for September.

“The Executive Board’s assessment is that the upturn in the Norwegian economy appears to be continuing broadly in line with the picture presented in the March Report,” the central bank said.

The crown currency strengthened to an intra-day high of 9.6726 against the euro from 9.7110 before the announcement. It then backtracked somewhat and was trading at 9.6925 at 0824 GMT.

Markets interpreted the outlook as reasonably confident at a time when its European peers such as the European Central Bank (ECB) and the Swedish central bank have struck a relatively more cautious note, ING economist Jonas Goltermann said.

“The Norwegians are staying the course at a time when everybody else including the ECB is sounding a bit more cautious and that is being perceived as slightly more confident than its (the Norwegian central bank’s) peers,” he added.

In its statement, the bank said that underlying inflation was below the inflation target, but that “driving forces” indicated that it would rise.

Core inflation year-on-year, which excludes the volatile oil and shipping sectors, fell to 1.2 percent in March from 1.4 percent in February, below expectations for a rise of 1.5 percent in a Reuters poll.

The finance ministry lowered in March the bank’s inflation target to 2.0 percent from 2.5 percent previously.

“The low inflation from March is not influencing their judgement,” said SEB Chief Strategist Erica Blomgren.

“In sum, the market has seen weaker data during the spring but the central bank does not give any impression that it will delay a rate hike.” (Reporting by Camilla Knudsen, Ole Petter Skonnord, and Terje Solsvik in Oslo and Tommy Wilkes in London Writing by Gwladys Fouche Editing by Raissa Kasolowsky)

0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below