Press Release

No 50/98
24.8.1998

Minister of Finance Gudmund Restad comments on rate increase by Norges Bank

The Government attaches great importance to maintaining the operative target of a stable exchange rate, says Minister of Finance Gudmund Restad. This policy has broad support in Parliament and among the social partners.

When the present guideline for implementation of monetary policy was set in 1994, it was stated that one would not use monetary policy instruments to the same degree as in the old system of a fixed exchange rate. If significant changes in the exchange rate occur, the instruments will be oriented with the aim of returning the exchange rate to its initial range. After today’s rate increase, the interest rate differential against European currencies is high.

Minister of Finance Restad states that the possibility that a situation like the present one might arise was acknowledged when the regulation for the implementation of monetary policy was set in 1994. The regulation gives guidelines for how monetary policy shall be conducted in these situations. Restad points out that the measures which have been taken are in line with the framework for implementation of monetary policy which has been in place since 1994.

When the value of the krone is held stable against European currencies, we must expect the European level of interest rates to be the main determinant of Norwegian rates over time.

Contact: Anne-Sissel Skånvik, telephone +47 22 24 41 09