Norway’s central bank left the key interest rate unchanged again, at zero percent, and signaled that the rate will remain at the current level for some time ahead.
The Monetary Policy and Financial Stability Committee unanimously decided to retain the policy rate at zero percent, Norges Bank said in a statement.
The previous change was a quarter point reduction in May, after a cumulative 125 basis points reduction in two extraordinary sessions in March from 1.50 percent.
Higher infection rates and stricter containment measures are now holding back the recovery, the bank said.
That said, the positive news about vaccines and prospects that vaccination can begin in the very near future, may result in a faster pick-up in economic activity than previously projected, Norges Bank added.
“The sharp economic downturn and considerable uncertainty surrounding the outlook suggest keeping the policy rate on hold until there are clear signs that economic conditions are normalizing”, Governor Oystein Olsen said.
The policy rate forecast implies a rate at the current level for over a year ahead, followed by a gradual rise from the first half of 2022 as activity approaches a normal level, the bank said. This implies a somewhat faster rate rise than projected in September.