Tuesday, June 23, 2015

Economic Summary for the week ended 23rd June 2015

It came as no surprise that the Norges Bank voted to cut its policy rate by 25 bps to a record low last week of 1.0%, one of the highest policy rates in Europe. The economic challenges Norway faces are rather different to its neighbours: firstly, Norway is the only net oil exporter in western Europe; secondly, its housing market has boomed after the crisis compared to the European union. With a depreciating krone, increasing consumer prices, and rising house prices, a rate cut may seem rather counter- intuitive. Norway has weathered the storm so far but with signs of an imminent slowdown in the oil industry pushing down Norway’s 2015 and 2016 GDP growth forecasts, further rate cuts are expected from September into 2016.

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