December 16, 2016 / 12:19 PM / a year ago

Handelsbanken says no longer believes Norway will cut rates

OSLO, Dec 16 (Reuters) - Economists at Handelsbanken Capital Markets no longer believe that Norway’s central bank will cut interest rates, and that it will instead keep the policy rate at 0.5 percent for the foreseeable future, the brokerage said in a research note on Friday.

“Norges Bank has changed its strategy, which we believe makes further interest rate cuts much less likely. Worries about financial stability and the housing market take centre stage, in practice putting a soft floor under the interest rate,” it said.

“Before Norges Bank cuts the policy rate any further, we would likely need to see much larger shortfalls in inflation and the real economy than previously,” Handelsbanken added. (Reporting by Terje Solsvik, editing by Nerijus Adomaitis)

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