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NORGES BANK: Governor Speech Focuses On Balance Sheet Policy

NORGES BANK
Central Bank NewsCEEMEANorges BankBulletNorwayGlobalFixed Income BulletsForeign Exchange BulletsRegionMarkets

We wouldn’t read into Governor Wolden-Bache saying “the time to ease monetary policy is approaching" in today's speech. This was the title of her speech at the September monetary policy decision. On October 24, the Governor will speak on “Monetary policy challenges in a small open economy: The case of Norway” at the Peterson Institute, which may be a better forum to discuss the policy rate outlook ahead of the November 7 meeting.

  • Instead, today’s speech discussed the structure of Norges Bank’s balance sheet, and the adjustments the bank will need to make when the government changes how it manages liquidity from 2025.
  • From 2025, growth in FX reserves will “be reflected in other items on Norges Bank’s balance sheet than in deposits from the government”.
  • The two options faced by Norges Bank are:
  • (1) “To let further growth in FX reserves appear somewhere else on the liabilities side of our balance sheet”; or
  • (2) “To adjust the asset side of the balance sheet by selling foreign currency and buying NOK which we then give to the government”.
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We wouldn’t read into Governor Wolden-Bache saying “the time to ease monetary policy is approaching" in today's speech. This was the title of her speech at the September monetary policy decision. On October 24, the Governor will speak on “Monetary policy challenges in a small open economy: The case of Norway” at the Peterson Institute, which may be a better forum to discuss the policy rate outlook ahead of the November 7 meeting.

  • Instead, today’s speech discussed the structure of Norges Bank’s balance sheet, and the adjustments the bank will need to make when the government changes how it manages liquidity from 2025.
  • From 2025, growth in FX reserves will “be reflected in other items on Norges Bank’s balance sheet than in deposits from the government”.
  • The two options faced by Norges Bank are:
  • (1) “To let further growth in FX reserves appear somewhere else on the liabilities side of our balance sheet”; or
  • (2) “To adjust the asset side of the balance sheet by selling foreign currency and buying NOK which we then give to the government”.