Norway's central bank raises key policy interest rate
Norway's key policy rate will be raised by 0.25 percentage points to 3.25 percent to curb inflation, Norges Bank announced Thursday.
The decision to raise interest rates was announced by the central bank on Thursday morning. The increase is in line with forecasts from Norges Bank in March.
"The committee's assessment is that there is a need for a higher interest rate to curb inflation," a statement on the decision reads.
Inflation in Norway is currently at 6.2 percent, excluding changes in energy and taxes, according to figures from the national data agency Statistics Norway.
Interest rates in Norway are now at their highest level since 2008, Norwegian public broadcaster NRK writes.
Moving forward, Norges Bank would consider raising interest rates even further than forecast due to the struggling krone, the bank's governor said.
"If the krone remains weaker than assumed or the pressure in the economy persists, a higher interest rate than we have previously envisaged may become necessary," Ida Wolden Bank, Governor of Norges Bank, said.
The Norwegian krone is down considerably to the euro, dollar and pound compared to a year ago. Lower interest rates in Norway compared to elsewhere have been pointed to as a contributing factor to a weak krone.
READ ALSO: How long will the Norwegian krone remain weak?
Kjersti Haugland, the chief economist at DNB Markets, told NRK that the interest rate could be raised higher than the target of 3.5 percent initially set by Norges Bank.
"I am not exactly getting weaker in the belief that the interest rate peak will end at 4 percent this autumn. However, this is a clear hint that Norges Bank will not settle for a permanently weaker krone without reacting with interest rate hikes," she said.
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The decision to raise interest rates was announced by the central bank on Thursday morning. The increase is in line with forecasts from Norges Bank in March.
"The committee's assessment is that there is a need for a higher interest rate to curb inflation," a statement on the decision reads.
Inflation in Norway is currently at 6.2 percent, excluding changes in energy and taxes, according to figures from the national data agency Statistics Norway.
Interest rates in Norway are now at their highest level since 2008, Norwegian public broadcaster NRK writes.
Moving forward, Norges Bank would consider raising interest rates even further than forecast due to the struggling krone, the bank's governor said.
"If the krone remains weaker than assumed or the pressure in the economy persists, a higher interest rate than we have previously envisaged may become necessary," Ida Wolden Bank, Governor of Norges Bank, said.
The Norwegian krone is down considerably to the euro, dollar and pound compared to a year ago. Lower interest rates in Norway compared to elsewhere have been pointed to as a contributing factor to a weak krone.
READ ALSO: How long will the Norwegian krone remain weak?
Kjersti Haugland, the chief economist at DNB Markets, told NRK that the interest rate could be raised higher than the target of 3.5 percent initially set by Norges Bank.
"I am not exactly getting weaker in the belief that the interest rate peak will end at 4 percent this autumn. However, this is a clear hint that Norges Bank will not settle for a permanently weaker krone without reacting with interest rate hikes," she said.
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