Norway's Central Bank Raises Policy Rate to 4.5 Percent
Norges Bank increased borrowing costs by a quarter point to 4.5 percent and stated that high interest rates might last longer than expected.
Norway's Central Bank raised its key policy deposit rate by a quarter point to 4.5 percent. The bank emphasized that it is ready to take additional steps if necessary to achieve its inflation target.
Interest Rate Decision and Expectations
Norges Bank raised its main deposit rate by a quarter point to 4.5 percent. While 11 out of 21 forecasters surveyed by Bloomberg predicted this outcome, 10 had estimated that interest rates would remain steady.
Borrowing Costs and Inflation Outlook
The central bank projects that borrowing costs will remain close to current levels for some time and stay high longer than anticipated in June, before eventually declining.
In August, the CPI rose to 3.3 percent to reach a four-month high, while core inflation also climbed to the 3 percent level.
Statements by Governor Ida Wolden Bache
Norges Bank Governor Ida Wolden Bache stated that it will likely be necessary to keep the policy rate high for some time longer.
Bache expressed that the committee is prepared to raise the policy rate further if necessary to bring inflation down to the 2 percent target within a reasonable timeframe.
Global Markets and Other Banks
Norges Bank's decision showed that Norwegian authorities are maintaining the restrictive approach they adopted in May.
Neighboring Sweden's Riksbank kept its interest rate at 1.75 percent, while the Swiss National Bank also left its benchmark interest rate unchanged at zero.