Norway's central bank on Wednesday decided to keep its key policy rate unchanged for the second consecutive session, citing better-than-expected improvement in the economy.
The Norges Bank Executive Board retained the benchmark interest rate at 1.50 percent for the second time in a row. In March, the bank had lowered the rate by 25 basis points in a surprise move.
"The analyses in this Monetary Policy Report imply a key policy rate at about today's level towards the end of 2012," Governor Øystein Olsen said. "Thereafter, the key policy rate is projected to rise gradually towards a more normal level. However, there is considerable uncertainty surrounding economic developments ahead."
Norway's annual inflation rose to 0.5 percent in May from 0.3 percent in April, driven mainly by higher airline fares and food products. Core inflation accelerated to 1.4 percent from 0.7 percent a month ago.
The economy expanded at a faster pace of 1.1 percent sequentially in the first quarter than the fourth quarter's 0.8 percent, helped mainly by strong growth in domestic consumption and steady rise in investment.
by RTT Staff Writer
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