In September last year Norges Bank (NB) raised its rate for the first time in 7 years and then in December it confirmed the rate "most likely" would be raised in March this year to 1.0 percent, followed by a gradual rise to 2.0 percent by the end of 2021.
In today's brief statement, NB said global growth was "a little weaker" than it had projected in its December monetary policy report and there is still considerable uncertainty about the future.
But in Norway, economic growth and the labor market is largely as forecast while inflation has been slightly higher than expected, NB said.
NB publishes a monetary policy report with economic projections four times a year, in March, June, September and December.
In its report from December, NB maintained its forecast for raising the policy rate once in 2019 but lowered it slightly for 2020 and 2021, projecting two hikes in both 2020 and 2021.
Norway's oil-dependent economy has been growing solidly since the fall of 2016 but slowed more than expected in the third quarter of 2018 to annual growth of 1.1 percent, down from 3.4 percent in the second quarter.
In December the central bank lowered its 2018 growth forecast for the mainland economy to 2.4 percent from 2.5 percent and the 2019 forecast to 2.3 percent from an earlier forecast of 2.5 percent. For 2020 NB forecast growth of 1.6 percent and 2021 growth of 1.4 percent.
Inflation, however, on the other hand, has been above the NB's target of 2.0 percent, boosted by higher electricity rates, wages and a weak Norwegian krone.
In December Norway's headline inflation rate was steady at 3.5 percent from November and NB raised its forecast for inflation to average 1.8 percent in 2019 from a previous 1.3 percent. The 2018
For 2020 NB forecast headline inflation of 1.6 percent and 1.8 percent in 2021.
The Norwegian krone weakened slightly in response to the NB's statement but is still higher on the year, trading at 8.58 to the U.S. dollar, up 0.8 percent this year.
Norges Bank released the following statement:
"In Monetary Policy Report 4/18, which was published on 13 December 2018, the Executive Board's assessment was that capacity utilisation in the Norwegian economy was close to a normal level. Underlying inflation was close to the 2 percent target. The Executive Board's assessment of the outlook and balance of risks suggested that the policy rate would most likely be raised in March 2019.
The outlook and the balance of risks imply a gradual increase in the policy rate. Global growth is a little weaker than projected, and there continues to be considerable uncertainty surrounding developments ahead. In Norway, economic growth and labour market developments appear to be broadly as projected, while inflation has been slightly higher than expected.
"Overall, new information indicates that the outlook for the policy rate for the period ahead is little changed since the December Report", says Governor Øystein Olsen."
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