MNI REVIEW: Norges Bank Leaves Repo Unchanged; Signals Pause

--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$$$$,MX$$$$]