Norway’s central bank raised interest rates by 25 basis points to 0.75%, as expected, and said a further rise was possible in June.
In September, Norges Bank became the first major western central bank to raise interest rates after the pandemic, when it rose to 0.25% from 0%.
This was followed by a further increase in December, to 0.50%.
In its monetary policy report on Thursday, the central bank said it now expects the interest rate to rise to about 2.5% by the end of 2023, having previously spoken of an interest rate of around 1.75%.
Activity in the Norwegian economy continues to grow after the restrictive measures that came in the winter, and while the war in Ukraine has led to increased uncertainty about the economic outlook, there are still prospects for continued growth of the Norwegian economy.
The commission also highlighted concerns about the risks of rising prices and wages, and said that if there were prospects for persistently high inflation, the policy rate could rise faster.
“Based on the committee’s ongoing assessment of the outlook and the risk balance, the policy rate is likely to rise further in June,” said Ida Wolden Bache, the central bank’s interim governor.
Source: Capital
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