MNI PREVIEW: New Norges Bank Committee, Unchanged Policy

--Norges Bank Starts 2020 With A New Executive Board And Monetary Policy

Committee

--Details Of How New Committee Will Operate Expected Thursday

--Jan Policy Decision Expected To Be Non Event, With No Change and No New

Forecasts

By David Robinson

     LONDON (MNI) - Norges Bank should give details of how its new monetary

policy committee will operate after its first meeting of the year on Thursday,

but is almost certain to leave its policy rate unchanged at 1.5%.

     Following are anticipated points of interest in Thursday's 0900 GMT

announcement from Norges Bank:

     --The January meeting is an interim one, with no published updates of the

Bank's economic forecasts or anticipated rate path.

     The policy statement is likely to reprise Governor Oystein Olsen's

statement that "The Executive Board's current assessment of the outlook and

balance of risks suggests that the policy rate will most likely remain at the

current level in the coming period."

     Norges Bank's December rate projections showed the rate rising from 1.50%

to peak at 1.60%, before dipping back to 1.55% by the end of the three-year

forecast horizon.

     On MNI estimates that attached a 40% chance to a 25-basis-point hike in

2020, with an increase never more likely than not in the projection.

     --The policy statement could make reference to recent data providing

evidence of decelerating activity but this would be in line with December's

statement that "growth in the mainland economy is slowing," which the central

bank said was compatible with inflation remaining close to target and capacity

utilisation dropping towards normal levels.

     --Norges Bank, in compliance with a new central bank act, has rejigged its

executive board and is devolving interest rate decisions to a monetary policy

committee.

     The committee will include the two individuals who have been the public

face of the central bank's monetary policy setting, Governor Oystein Olsen and

Deputy Governor Jon Nicolaisen, who will serve as first deputy chair.

     The second deputy chair is another familiar face, Deputy Governor Egil

Matsen, the finance expert who has been closely associated with the central

bank's supervision of the national wealth fund under Norges Bank Investment

Management.

     --The two newcomers on the committee are Professor Ingvild Almas and

Jeanette Strom Fjaere, an economist at DNB Markets.

     How much influence they will have on the policy debate is yet to be seen.

     Almas, who holds professorships at Stockholm University and Norway's NHH,

made her name in studies of inequality and behavioural economics, garnering

media attention for recent work contrasting public attitudes towards inequality

in the U.S. and Norway.

     Strom Fjaere focussed primarily on the Norwegian and Swedish economies at

DNB, erroneously forecasting that Norges Bank would keep rates on hold at last

September's meeting.

     --Norges Bank has room for manoeuvre under the central bank act to decide

how to communicate on policy.

     Previously, it has operated a 'consensual' policy setter, with Nicolaisen

and Olsen speaking on behalf of the Bank with other members' views remaining

private. This is not proscribed by law and it will be up to the committee to

decide how to proceed.

     In an interview with MNI last July, Nicolaisen said "I see some clear

advantages of having one person speaking for the committee in terms of clarity

and predictability but ... this will be up to the committee."

     Another issue is how any dissents over policy will be revealed, with the

Norges Bank repeatedly stating that decisions were unanimous.

     The statement on Thursday should shed light on how the new committee is

going to operate.

--MNI London Bureau; tel: +44 203-586-2223; email: david.robinson@marketnews.com

[TOPICS: MT$$$$,MX$$$$]