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Norway appoints a Monetary Policy and Financial Stability Committee

Summary:
I have been arguing why RBI needs to have a different forum to discuss matters pertaining to fin stability. Currently, all discussions with media and public are mooted via MPC meeting which mainly looks at price stability. Central banks such as those of England and US have built seperate forums to discuss matters on finance. Central Bank of Norway did not have  MPC as of now. Now they have gone ahead and established a Monetary Policy and Financial Stability Committee: The Monetary Policy and Financial Stability Committee is appointed by the King in Council. The Committee consists of the Governor, the two Deputy Governors and two external members. The new Central Bank Act entered into force on 1 January 2020. An updated description of the committee is in preparation. The Committee is

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I have been arguing why RBI needs to have a different forum to discuss matters pertaining to fin stability. Currently, all discussions with media and public are mooted via MPC meeting which mainly looks at price stability. Central banks such as those of England and US have built seperate forums to discuss matters on finance.

Central Bank of Norway did not have  MPC as of now. Now they have gone ahead and established a Monetary Policy and Financial Stability Committee:

The Monetary Policy and Financial Stability Committee is appointed by the King in Council. The Committee consists of the Governor, the two Deputy Governors and two external members.

The new Central Bank Act entered into force on 1 January 2020. An updated description of the committee is in preparation.

The Committee is responsible for Norges Bank’s role as the executive and advisory monetary policy authority and is responsible for the use of policy instruments to attain the monetary policy objectives. The Committee shall contribute to the promotion of financial stability by providing advice and using the policy instruments at its disposal.

So they call it specifically as Monetary Policy and Financial Stability Committee (MPFSC). Even RBNZ started a MPC and gave it a specific function of financial stability.

The MPFSC recently took its first decision:
In Monetary Policy Report 4/19, which was published on 19 December 2019, the assessment was that the policy rate would most likely remain at 1.50 percent in the coming period. With an unchanged policy rate, there were prospects that inflation would remain close to the inflation target, and that capacity utilisation would decline towards a normal level.
The Committee’s assessment is that new information largely confirms the picture of the economic developments presented in the December Report. The risk of a sharp downturn in the global economy appears to have receded somewhat since autumn, but uncertainties surrounding global developments persist. Underlying inflation is close to the inflation target. Capacity utilisation in the Norwegian economy appears to be somewhat above a normal level, but new information supports the view that the economy is probably near a cyclical peak. The Committee’s assessment is that interest rate prospects for the coming period are little changed since the December Report.
“The Committee’s current assessment of the outlook and the balance of risks suggests that the policy rate will most likely remain at the present level in the coming period”, says Governor Øystein Olsen.
Will have to wait for more details on the MPFSC. Variants are emerging due to challenges posed by financial stability…
Amol Agrawal
I am currently pursuing my PhD in economics. I have work-ex of nearly 10 years with most of those years spent figuring economic research in Mumbai’s financial sector.

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