Norway's central bank said Thursday that its executive board decided in its latest meeting to keep the key policy rate unchanged at 0.50 percent.
There are prospects that inflation will be lower than expected earlier, which, in isolation, implies a lower key policy rate in the period ahead, Norges Bank said in a statement.
On the other hand, the upturn in the real economy appears to have taken hold, and unemployment has declined, the bank said, adding that inflation expectations appear to be firmly anchored.
With a key policy rate close to the current level, there are prospects that inflation will pick up again further out. An even lower key policy rate could lead to a further acceleration in house price inflation and debt accumulation, according to the central bank.
"Monetary policy is expansionary and supportive of structural adjustments in the Norwegian economy. The Executive Board's current assessment of the outlook suggests that the key policy rate will most likely remain at today's level in the period ahead," Oystein Olsen, governor of Norges Bank, was quoted as saying.
In Norway, the key policy rate, also called the sight deposit rate, is the interest rate on bank deposits up to a quota in Norges Bank.
Changes in Norges Bank's key policy rate will normally have a strong impact on short-term money market rates and on banks' deposit and lending rates. The Norwegian central bank's next rate decision will be announced on May 4.
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