Norway’s central bank raises interest rate, may hike again
Norges Bank raised its policy interest rate by 25 basis points to 4.50% to contain inflation, as expected by a narrow majority of analysts.
On Thursday, Norway's central bank, Norges Bank, increased its policy interest rate by 25 basis points to 4.50%, in an effort to curb inflation according to expectations. The bank's governor, Ida Wolden Bache, stated that the rate may be raised again if necessary to achieve the 2% inflation target within a reasonable timeframe. The Norwegian krone rose against the euro following the announcement, from 10.79 to 10.76.
In May, the bank raised rates by the same margin, ahead of most analysts' expectations. However, in August, the bank indicated that future monetary policy decisions would depend on economic developments, casting some uncertainty on the policy's trajectory. Among the 28 economists surveyed in a Reuters poll conducted from September 17-21, 16 predicted a 25 basis-point hike to 4.50% on Thursday, while 12 anticipated no change.
Seven economists believed a rate hike to 4.50% would occur in the fourth quarter. The core inflation rate in Norway stood at 3.0% year-on-year in August, slightly below the bank's forecast of 3.3% but still above the target. Despite the moderation of underlying inflation during the summer, the bank's inflation outlook for the near future remains unchanged, according to Bache.
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