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  • Jan 8th, 2004
  • Comments Off on Norwegian prime minister urges wage restraint to aid NOK and rates
Norwegian prime minister urged wage moderation on Wednesday, saying he hoped that pay rises in 2004 would not make the crown and interest rates go "out of control".

Kjell Magne Bondevik also said in a speech prepared for delivery at a business and industry conference in Oslo that fiscal policy had improved competitiveness by Norwegian companies and helped job security.

"I am hoping that we can continue this work through, among other things, a wage settlement which does not make last year's positive results for the currency and for rates go out of control," Bondevik said.

The crown hit its weakest level against the euro since early 1999 on Tuesday on growing belief that more interest rate cuts are on the way after the central bank cut its key deposit rate to an historic low 2.25 percent last month.

The currency was trading at around 8.5468 per euro at 0900 GMT on Wednesday, slightly firmer than 8.5613 late on Tuesday but much weaker than 8.4180 late on Monday.

Bondevik was speaking at an annual conference of the Confederation for Norwegian Business and Industry, Norway's main employers' group, which is due to hold wage talks with labour unions this spring.

In earlier years, relatively strong wage growth in Norway spurred inflation and kept interest rates high and the crown strong, hurting the Norwegian companies' competitiveness.

Core inflation fell in November to just 0.5 percent year-on-year, well below the central bank's target of 2.5 percent.

Copyright Reuters, 2004


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