Norway’s central bank raised its key interest rate by 50 basis points on Thursday, the biggest increase since 2002 and double what economists had expected, and plans to raise it again in August as the country tries to curb inflation. .
Norges Bank’s monetary policy committee raised its spot deposit rate to 1.25% from 0.75%, exceeding its own forecast in March for an increase to 1%.
“Based on the committee’s ongoing assessment of the outlook and the risk balance, the policy interest rate is likely to increase further, to 1.5% in August,” Governor Ida Wolden Bache said in a statement.
Of the 20 economists polled by Reuters, 14 had predicted that the central bank would raise interest rates by 25 basis points, while six said a 50 basis point increase was more likely.
The central bank predicted that the interest rate could rise to 3% by mid-2023, having previously spoken of 2.5% by the end of the year.
“This underscores how concerned central banks are about inflation,” said a Nordea Markets analyst.
The Norwegian central bank has further downgraded its forecast for growth in the Norwegian economy, which does not include oil and gas, to 3.5% for 2020 from 4.1% expected in March, raising its estimate for structural inflation to 3.2% from 2.5%.
Source: Capital
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