January 24, 2019 / 9:55 AM / 25 days ago

Norway keeps rates on hold, reiterates plan to raise them in March

FILE PHOTO: A general view of the Norwegian central bank in Oslo, Norway March 6, 2018. Picture taken March 6, 2018. REUTERS/Gwladys Fouche

OSLO (Reuters) - Norway’s central bank left its main interest rate unchanged at 0.75 percent on Thursday, as expected, and reiterated plans to raise them in March, in line with its previous forecast.

“The outlook and the balance of risks imply a gradual increase in the policy rate,” Norges Bank said, echoing a report last month where it laid out plans to raise rates twice in 2019 and three more times by the end of 2021.

“Overall, new information indicates that the outlook for the policy rate for the period ahead is little changed since the December Report,” Governor Oeystein Olsen said in a statement.

Following the unanimous decision, Norway’s currency, the crown, gained 0.2 percent against the euro to trade at 9.7175 at 0932 GMT.

“This is as expected ... we’re now even more certain of a March hike,” Nordea Markets economist Erik Bruce said.

The central bank raised rates last year for the first time since 2011 as growth and inflation picked up. It will release a full set of new forecasts and a new rate path at its meeting on March 21.

“Global growth is a little weaker than projected, and there continues to be considerable uncertainty surrounding developments ahead,” the bank said. “In Norway, economic growth and labour market developments appear to be broadly as projected, while inflation has been slightly higher than expected.”

In its statement, the board of the central bank also took note of the recent weakness of the crown, a factor that may boost the Norwegian economy, brokers DNB Markets said.

“Depreciation of the crown and the more positive view on the economy, as well as higher inflation, outweigh a more dovish outlook on the global economy,” DNB Markets economist Kyrre Aamdal said.

Additional reporting by Nerijus Adomaitis, writing by Terje Solsvik, editing by Larry King

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