Norway’s central bank should track credit growth and the risk of asset bubbles more closely when setting interest rates as the financial crisis forces policy makers to rethink their stance, said Governor Oeystein Olsen .
Norges Bank raised its benchmark interest rate a quarter point, resuming a tightening cycle policy makers shelved last quarter as they seek to balance the krone’s appreciation against rebounding household demand.
Norway’s central bank left its benchmark interest rate unchanged for a third meeting today after policy makers scaled back tightening plans to adjust to the prospect of a slower recovery in global export markets.
Norway’s $570 billion oil fund may get more leeway to expand into new asset classes such as roads, gas pipelines and unlisted shares as the government switches its top adviser for setting the investor’s guidelines.
The man tipped to become governor of Norway’s central bank when Svein Gjedrem steps down in December says policy makers should shelve tightening for about a year to avoid strengthening the krone and hurting exporters.
Norges Bank Governor Svein Gjedrem signaled his opposition to removing Norway’s $520 billion oil fund from the central bank after the government said the fund’s size may require putting it under new management.
Norway’s central bank can’t be held accountable for industrial competitiveness and the exchange rate when setting monetary policy, Governor Oeystein Olsen said, as the bank prepares to resume tightening later this year.