Norway’s inflation rate dropped in January to the lowest level since 2006, increasing the central bank’s scope to keep interest rates unchanged.
The cycle of disinflation gripping much of the developed world has bypassed Scandinavia’s richest economy.
Norway’s economy will expand at a slower pace than previously forecast as weaker demand from crisis-hit Europe and a strong krone hurt exports, Statistics Norway said.
The krone will rally against the euro as the central bank raises its key rate on May 5 even as a stronger currency threatens to slow the nation’s economic rebound, according to Nordea Bank AB.
Norway central bank Governor Oeystein Olsen is signaling a willingness to tolerate more weakness in the krone, among the worst-performing currencies of the past year, even if that causes inflation to accelerate.
"The government will be careful not to overspend and start strengthening the krone and the expectations for higher interest rates."
- Erik Bruce on Oct 06, 2014