Norges Bank has raised the key interest rate by 0.5 percentage points to 2.25 percent, the third double rate hike in a row.
Norway’s key policy rate is in line with analysts’ predictions and brings interest rates in the country to the highest level in over a decade.
The central bank has seen sharply increasing rates from historic lows introduced in the pandemic as a tonic to curb inflation.
“Price growth is clearly above our target of 2 percent, and there is a prospect that it will remain high for longer than previously estimated. We raise the interest rate to curb price inflation,” Ida Wolden Bache, governor of Norges Bank, stated when the announcement was made.
In addition to the current rate increase, the bank said another rise would come in November.
Inflation in Norway was around 6.5 percent between August and the same month the year before, according to figures from the national data agency Statistics Norway.
On Tuesday, neighbouring Sweden raised the policy rate by one percentage point.
While the interest rate increases are seen as a measure that can help curb inflation, several groups have warned that the hikes could lead to increased unemployment.
Statistics Norway said Thursday that unemployment would likely increase in the near future as a result of rate increases.
“Increased interest rates and inflation, together with the decline in the international economy, will slow down the Norwegian economy and contribute to increased unemployment,” director of Statistics Norway Geir Axelsen told Norwegian newswire NTB.
“We think there will be a slight increase at the end of the year already, while we estimate unemployment will be 3.6 per cent on average in 2023,” he added.
READ ALSO: How much poverty is there in Norway?