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--Norges Bank Tilts Away From September Hike
By David Robinson
     LONDON (MNI) - Norges Bank's Executive Board left policy on hold at its
August meeting and tilted away from a hike next month, citing increased
uncertainty from global risks.
     While the unchanged policy decision was widely expected, some analysts had
speculated Norges Bank would change its guidance to make clear a hike was likely
in September. But its board left the timing of any potential hike open.
     Following are key points from the policy announcement:
     --"Overall, new information indicates that the outlook for the policy rate
for the period ahead is little changed since the June Report. The global risk
outlook entails greater uncertainty about policy rates going forward", Governor
Oystein Olsen said.
     In June, the board hiked the policy rate by 0.25 percentage point to 1.25%
and said that the "balance of risks suggests that (it) ... will most likely be
increased further in the course of 2019."
     --The bank's summary of developments highlighted the weakening of economies
abroad.
     "Growth prospects for Norway's trading partners appear to be a little
weaker than assumed in June," the summary stated, citing the familiar issues of
U.S. and China trade tensions and Brexit uncertainty.
     --In contrast, Norwegian economic growth remained solid and in line with
the projections in the June Monetary Policy Report.
     "The upturn in the Norwegian economy is continuing broadly as expected in
June. Underlying inflation has been a little lower than projected. Deepening
trade tensions and heightened uncertainty surrounding the UK's relationship with
the EU may weigh on growth abroad and in Norway," the central bank's summary
stated.
     --The krone has depreciated rapidly in recent weeks, with the effective
exchange rate index down almost 3% on the month. Norges Bank's own research has
pointed out that the krone only tends to move in synch with the oil price when
the latter falls or rises sharply, as it has recently.
     "A weaker krone may contribute to higher inflation ahead," board noted.
     Investors factored in a lower probability of a September hike after the
announcement, although the euro/krone exchange rate, after initially moving a
little higher, soon settled back into its previous range.
--MNI London Bureau; tel: +44 203-586-2223; email: david.robinson@marketnews.com
[TOPICS: MT$$$$,MX$$$$]

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