Norway central bank raises key rate to 1.25 pct

Source: Xinhua| 2019-06-20 21:18:14|Editor: xuxin
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OSLO, June 20 (Xinhua) -- Norway's central bank on Thursday decided to raise the key policy rate by 0.25 percentage point to 1.25 percent.

Growth in the Norwegian economy is solid, and capacity utilization is estimated to be somewhat above a normal level, Norges Bank said in a statement.

The upturn in the Norwegian economy appears to be a little stronger the coming year than projected earlier, the bank said.

On the other hand, there are prospects for weaker external growth and lower foreign interest rates, it said.

Underlying inflation is a little higher than the target, the bank said trade tensions are a source of substantial global uncertainty.

The overall outlook and balance of risk suggest that the policy rate be increased somewhat further, it said.

"Our current assessment of the outlook and balance of risks suggests that the policy rate will most likely be increased further in the course of 2019," the bank's governor Oystein Olsen 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.