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OSLO, Oct 8 (Reuters) - The Norwegian central bank’s key policy interest rate will likely remain unchanged for the next few years, Governor Oeystein Olsen said on Tuesday, reiterating the message delivered by the bank’s policy-setting board last month.
“In our September interest rate forecast, the policy rate remains close to today’s level of 1.5 percent for the next couple of years,” Olsen said in a speech.
Norges Bank last month hiked rates for the fourth time in 12 months amid strong domestic growth but said further policy tightening had become less likely as the global economy was slowing down.
“On the one hand, growth in the Norwegian economy is still solid, inflation is close to the target and capacity utilisation is somewhat above a normal level,” Olsen said in a speech at a business school in Oslo.
“On the other hand, there is considerable uncertainty about the global growth outlook. The policy rate path reflects a trade-off between these conditions,” the governor added.
Outlining the central bank’s policy toolkit, Olsen said the country had space for manoeuvre both on monetary and fiscal policy in case of unforseen events.
“In the event of a severe downturn, we would lower the policy rate,” he said, while reiterating a desire to avoid following other European central banks into negative territory or quantitative easing. (Reporting by Terje Solsvik, editing by Gwladys Fouche)