In March Norges Bank said the rate would most likely remain at the current level in the period ahead in light of low inflation, an improving economy and the risk that a rate cut could lead to further acceleration in house prices and debt.
In the quarterly March report, the central bank forecast its key rate would be 0.4 percent this year and in 2018 before rising to 0.6 percent in 2019 and 1.1 percent in 2020.
In today's statement, the central bank noted that inflation, adjusted for taxes and excluding energy, was 1.7 percent in March, broadly as it had forecast, while unemployment was lower than projected and the exchange rate of the krone had depreciated.
Norway's headline inflation rate eased to 2.4 percent in March from 2.5 percent in the previous month while core inflation rose to 1.7 percent from 1.6 percent in the same period. The central bank targets inflation of around 2.5 percent.
The unemployment rate declined to 4.3 percent in the first quarter of this year from 4.7 percent in the previous quarter.
Norway's krone fell sharply in the wake of the decline in global crude oil prices in 2014 and hit a record low around 8.96 to the U.S. dollar in January 2016. Since then it has been more stable and was trading at 8.68 to the dollar today, marginally down from 8.65 at the start of this year.
In March Norges Bank lowered its forecast for 2017 headline inflation to 2.2 percent from a previous 2.3 percent, the 2018 forecast to 1.3 percent from 1.8 percent and the 2019 forecast to 1.2 percent from 1.7 percent.
The outlook for mainland economic growth was raised to 1.6 percent from 1.5 percent, while the 2018 forecast was cut to 2.0 percent from 2.2 percent and the 2019 forecast was steady at 2.2 percent.
In a separate statement, the central bank said that beginning in 2018 its executive board would meet eight times a year to discuss monetary policy, up from six times a year.
In addition, staring on Oct. 25 this year minutes of its board meetings would be published together with its policy decisions to help increase transparency.
The central bank will continue to publish its monetary policy report in the months of March, June, September and December, followed by a press conference, the bank added.
Norges Bank issued the following statement:
"In Monetary Policy Report 1/17, which was published on 16 March 2017, it was the Executive Board's assessment that there was a continued need for an expansionary monetary policy. Capacity utilisation in the Norwegian economy was assessed to be below a normal level, and inflation was expected to range between 1 and 2 percent in the coming years. The Executive Board was of the view that the key policy rate would most likely remain at 0.5 percent in the period ahead.
The twelve-month rise in consumer prices adjusted for tax changes and excluding energy products (CPI-ATE) was 1.7 percent in March, approximately as expected in the March Report. Registered unemployment has declined and is lower than projected. The krone exchange rate has depreciated, while expected money market rates for trading partners have fallen.
"The outlook and the balance of risks for the Norwegian economy do not appear to have changed substantially since the March Report. The key policy rate has therefore been kept unchanged at this meeting," says Governor Øystein Olsen."
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