Norges Bank lower rates expectations

As widely expected, the Norges Bank left rates unchanged at 2% at the end of last week’s monetary policy meeting. In the Monetary Policy report released after the meeting, the Norges bank indicated that the uncertain outlook on Euro zone economy would postpone the rate hikes previously projected in 2010. Rates are expected to remain unchanged by the time of the publication of Monetary policy report: 3 on October 27th. Rates are also projected to remain on hold by the end of the year versus a previous projection of 2.5%. Key rate is projected to grow to 2.75% by the end of 2011. The new projections clearly indicated that the Norges Bank see the internal economic recovery negatively affected by the European debt crisis. Only in the case the European economy should prove more resilient than expected to the debt crisis the Norges Bank may revise their projections, hiking more aggressively.