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MNI BRIEF: Norges Olsen: Financial Risk To Justify Tightening

(MNI) London
(MNI)

Norges Bank Governor Oystein Olsen said Thursday that "room for manoeuvre in monetary policy is nearly exhausted," policy makers did not envisage any further cuts in the zero percent policy rate, and rates would move higher once there were clear signs the economy was returning to normal.

Analysts have said that Norges Bank will be the first advanced economy central bank to start hiking its policy rate and Olsen argued that this tightening would be justified to curb financial risks, with rapidly rising house prices and household debt accumulation posing a particular threat in Norway.

He noted that that Norway, with its vast sovereign wealth fund managed by the central bank, the Government Pension Fund Global, has been very well placed to withstand the Covid shock. He also warned that while the NOK 300 billion transfer from the fund in 2020 was justified, it's important that increased government spending is reversed in coming years.

MNI London Bureau | +44 203-586-2223 | david.robinson@marketnews.com
MNI London Bureau | +44 203-586-2223 | david.robinson@marketnews.com

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