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--Norges Bank Leaves Repo Rate On Hold At 1.5%; Signals Prolonged Policy Pause
By David Robinson
     LONDON (MNI) - Norges Bank's Executive Board said on Thursday it left its
key policy rate unchanged at 1.5% at its October meeting and reaffirmed that
there was likely to be a prolonged policy pause.
     Following are the key points from its announcement:
     --Norges Bank hiked its policy rate by 25 basis points in September to
1.5%, as widely expected by analysts.
     The board sprang no surprises, restating September guidance that signalled
a prolonged policy pause.
     "The Executive Board's current assessment of the outlook and balance of
risks suggests that the policy rate will most likely remain at the present level
in the coming period," Governor Oystein Olsen said.
     --Unlike in September, the Norges Bank's meeting was not accompanied by a
full economic assessment, published in the Monetary Policy Report, without which
policy changes seldom occur.
     "New information indicates that the policy rate outlook for the coming
period is little changed since the September Report. The upturn in the Norwegian
economy is continuing broadly in line with expectations in September. Underlying
inflation has been as projected," the board said.
     --The September MPR showed the policy rate at 1.6% in 2020 and 2021 and
dipping back to 1.5% in 2022.
     MNI's estimate of the probabilities attached to Norges Bank's September
rate projection showed a 0% chance of a rate hike this year and only a 50%
chance of one by the end of 2020.
     --The September MPR showed GDP growth rising from 1.3% this year to 2.2% in
2020 before slowing to 1.9% in 2021.
     Challenges come from uncertainty surrounding the global economy and the
risk of input price inflation due to the Norwegian currency's weakness.
     "Global uncertainty persists, and interest rates abroad are very low. At
the same time, the weak krone may result in higher inflation ahead," the board's
statement said.
--MNI London Bureau; tel: +44 203-586-2223; email: david.robinson@marketnews.com
[TOPICS: MT$$$$,MX$$$$]

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