Norway Central Bank Hikes Rate to Surprise 1.25% From 0.75%, Signals Next Move in August
By Dominic Chopping
Norway's central bank unexpectedly raised its key policy rate to
1.25% from 0.75% on Thursday, and said it expects to raise the rate
further to 1.50% in August.
Analysts polled by The Wall Street Journal had expected the
central bank to raise its key rate to 1.00%.
Norges Bank said it now expects the policy rate to rise to
around 3% in the period to summer 2023. "This is above what is
estimated to be a neutral policy rate," it said.
It had previously expected a rate of around 2.5% at the end of
The central bank said inflation is markedly above target with
underlying inflation higher than projected, and with rising wage
growth and imported goods inflation, there are prospects that
inflation will remain above target for some time.
A markedly higher policy rate is needed to stabilize inflation
around target, it said.
"Prospects for a more prolonged period of high inflation suggest
a faster rise in the policy rate than projected earlier," Governor
Ida Wolden Bache said.
"A faster rate rise now will reduce the risk of inflation
remaining high and the need for a sharper tightening of monetary
policy further out," she said.
Write to Dominic Chopping at email@example.com
(END) Dow Jones Newswires
June 23, 2022 04:53 ET (08:53 GMT)
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