Norway's central bank has shifted focus away from the oil crash for now, according to Bloomberg's Saleha Mohsin.
Last Thursday, it left interest rates unchanged, even though oil prices have continued to decline and central banks around the world are easing.
That's because Norway's central bank is worried about something else: home prices.
Mohsin interviewed central bank governor Oeystein Olsen, who said the risk of low oil prices hasn't cleared, but hasn't become that much worse either.
And now, Olsen's focus is on Norway's hot housing market. Norwegian debt is at a record high, and about twice as much as household disposable incomes, according to Mohsin.
Norway's home prices rose to a record high in February, and that's caused the central bank to 'lean against the wind': A situation where central banks use policy to soften inflation or boost their economies against the general direction of the economic cycle.
Last December, Norway cut rates, saying "activity in the petroleum industry is softening and the sharp fall in oil prices is likely to amplify this tendency." Norway is Europe's largest oil producer.
However, in a presentation Kjersti Haugland, head of DNB Markets in Oslo, said home prices are rising for the right reasons but will decline over the next couple of years.
Haugland said high prices reflect "exceptional economic performance throughout the past 20 years, and high income growth." The presentation added that home prices "are set to decline for the next three years (-8%), as a the oil boom fades and fundamental drivers go from being strongly positive to mildly negative."
Here's Haugland's chart showing that inflation and building costs have been rising at a faster pace than wages.
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