Norges Bank Sees a Rate Hike Years Away on Economic Uncertainty

by birtanpublished on October 1, 2020

you really think that actually given
what you said today that you're kind of
diverging you see things a bit
to other you know major central banks
well i think just now there are not many
that many
differences i mean we we had if you go
back to march our poll
then you had a different situation we
had a policy rate at 1.5
but given the pandemic that hit us all
in in during the winter and spring
we are now most of us are now close
to zero and for for our part
we have in addition and undertaking
a number of well let's call them
measures measures linked to monetary
policy that we haven't
applied for quite some time
doctor we have a very important policy
as well voluntary policy as well now
yeah governor talk me a bit about
inflation would you be inclined like the
for inflation to overshoot would you be
comfortable with that
well respect with reference to to the
new strategy of this head
one one brief confrontation of that is
that it's it reflects
the feds strengthen the view of having
our monetary or have a flexible
inflation targeting system
with a dual mandate with sufficient
attention to the real economy
and to on to the unemployment level we
we have our mandate
and our own version of what you can call
uh flexible information targeting uh and
with the
sufficient focus on the same namely the
real economy and we have been for some
time quite relatively flexible
with respect to achieving a specific
number for the inflation governor
tom keane in new york good morning sir
thank you so much for joining us
is dollar strength intrusive upon you
if we see a persistent resilience in the
does that limit the norwegian tool kit
uh a different card question
we're we're small nor we have small open
economy and when
when a dollar moves our currency and
many other
currencies lose a move as well as you
know uh
we have we have seen even
the last couple of the last days in iran
a week no reason but
i think there's no drama it's nothing
similar to the situation we experienced
and handled in back in in march where we
had to intervene
for the first time since in the late
1990s in our view
now that even the current market
functions functions
quite well close to normal and and we
in a very different situation when i
look at the advantages
of norway and we all understand
hydrocarbons and such
you have your own fiscal calculus tell
us about the fiscal pressure you face
given the surge i mean a relative surge
in unemployment
out near 5 i mean are you the last
nation you would think so but are you
under fiscal pressure
as a central bank as a nation no not
well well as a central bank there's no
from any authority to sort of
coming closer to to what you can do
contributing to fiscal policy and as you
our fiscal situation as a nation is very
we have abundant uh reserves and this
rule of maneuvering fiscal policy has
exploited and in in this very
difficult situation we are all into
these days with
the academics so yes fiscal policy has
quite expansionary but unlike many other
we have we have uh we have assets
huge financial assets backgrounds
of course yeah governor
when you look at some of the imbalances
that maybe we observe
because of ultra low rates for longer is
there anything that we're under
appreciating is there anything that you
worry about
that we're not looking at yet
oh yeah there are always things to worry
from our point of view i mean we are we
are an extreme situation
i think we all have worry about the the
the pandemics
and and how that develops and science
and developments
in most countries including our own has
been quite worrying the last year well
since the summer
so that's the main uncertainty and but
and then that this has led to a sharp
sharp downturn in in our economy as well
like in many other countries
and and that has been handled by one by
fiscal policy
and also to some extent monetary policy
which in our case has
contributed to to to fight the downturn
but yes there are always more specific
worries as well uh
one specific area which we mentioned in
our recent report is uh
is we are we are so far we're quite
happy that we have
prevented a deep in this situation a
downturn in the housing market
so housing prices have been the rise
housing prices have been
some somewhat stronger than we
anticipated in the
in the summer but that is a very of
course if that
growth continues fueled by
very low interest rates and and that
also could fuel
uh again uh depth

arising death by households but that is
an area we have a focus on
but so far we are relatively pleased
with the development in our economy

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