MNI BRIEF: Norges Head Cautious Over Rate Cuts With Krone Soft
Norges Bank Governor makes case for caution over easing in her annual address, citing krone weakness.
Norges Bank Governor Ida Wolden Bache made the case for being patient over rate cuts, warning that inflation in Norway could stay high even as it falls internationally, due to krone weakness and strong wage growth in part due to a strong performance by the country's exporters.
Wolden Bache, in her annual address to the central bank's supervisory council, pushed back against the idea of rapid easing, saying that "it pays to be patient" noting that domestic wage growth last year reached its highest level in 15 years and that krone depreciation over the past year has contributed to elevated inflation in Norway.
The weak currency has boosted import costs but also driven up profits in Norway's powerful export sector, which could feed through to further high wage wage growth and sustained domestic cost inflation, she said.