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MNI (London)
     LONDON (MNI) - The Norges Bank raised its key policy rate by 25 bps to
0.75% following its meeting Thursday, in a move widely signalled by the central
bank in recent months.
     The full text of the Norges Bank statement follows.
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     The key policy rate raised to 0.75 percent Norges Bank's Executive Board
has decided to raise the key policy rate by 0.25 percentage point to 0.75
percent.
     The upturn in the Norwegian economy continues. Spare capacity is gradually
diminishing, and capacity utilisation now appears to be close to a normal level.
Underlying inflation is close to the 2 percent inflation target.
     Overall, the outlook and the balance of risks imply a gradual interest rate
increase in the years ahead. If the key policy rate is kept at the current level
for too long, price and wage inflation may accelerate and financial imbalances
build up further. That would increase the risk of a sharp economic downturn
further out. Uncertainty surrounding the effects of higher interest rates
suggests a cautious approach to interest rate setting.
     The interest rate outlook is little changed from the June 2018 Monetary
Policy Report. With a gradual interest rate increase, inflation is projected to
be close to the target some years ahead, at the same time as unemployment
remains low.
     "The Executive Board's current assessment of the outlook and balance of
risks suggests that the key policy rate will most likely be increased further in
2019 Q1", says Governor Oystein Olsen.
--MNI London Bureau; tel: +44 203-586-2225; email: les.commons@marketnews.com
[TOPICS: M$E$$$,M$X$$$,M$$EC$]
MNI London Bureau | +44 203-865-3812 | les.commons@marketnews.com