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Norway Central Bank Sees Greater Uncertainty On Rates Due To Global Risk

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Norway central bank said on Thursday that there is growing uncertainty regarding future interest rate hikes due to the worsening global risk outlook.

The Executive Board of the Norges Bank left the key policy rate at 1.25 percent, in line with economists' expectations.

The previous change in the rate was a quarter-point hike in June. The bank had then signaled that it will raise rates further this year.

New information indicates that the outlook for the policy rate for the period ahead is little changed since the June Report, Norges Bank Governor Oystein Olsen said.

"The global risk outlook entails greater uncertainty about policy rates going forward", he added.

The upturn in the Norwegian economy is continuing broadly as expected in June, the bank said.

Norges Bank expects worsening trade conflicts and increased uncertainty linked to the Brexit to weigh on foreign as well as domestic growth and weaker krone to push inflation higher.

"A rate rise at the next meeting still shouldn't be completely ruled out, but if the central bank is to follow through with its plan to tighten policy again this year, we think a December move looks much more likely," ING economists said.

"Don't forget that while the global outlook has clouded, the domestic growth outlook continues to receive support from a sharp rise in oil-related investment."

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