OSLO (dpa-AFX) - Norway's central bank left the key interest rate unchanged on Thursday, but signaled policymakers' readiness to raise interest rates in future as they assessed inflation as too high.
The Monetary Policy and Financial Stability Committee of the Norges Bank decided to keep the policy rate unchanged at 4.5 percent, as expected. Previously, the bank raised the rate by 25 basis points in September.
'Inflation is too high,' Norges Bank Governor Ida Bache said. 'It will likely be necessary to keep the policy rate elevated for a time, and we are prepared to raise the policy rate if needed to bring inflation down to target within a reasonable time horizon.'
Norges Bank assessed that the conflicts in the Middle East continue to create significant uncertainty about the inflation outlook. Meanwhile, unemployment was neither especially high nor unusually low, the bank said.
Inflation remains markedly above the central bank's 2 percent target. The bank expects the rapid rise in business costs in recent years to likely contribute to keeping inflation elevated ahead.
'High inflation over time can make inflation stickier and harder to bring down again,' Norges Bank said. 'At the same time, the Committee does not want to restrict the economy more than needed.' Headline inflation was 3.4 percent in September.
Norges Bank said policymakers will review their current assessment in December in the light of the latest macroeconomic projections that will be available then.
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