By Dominic Chopping
Norway’s central bank raised its key policy rate on Thursday and said that another increase is likely next month as inflation remains above target.
Norges Bank increased its key policy rate by 25 basis points to 4.0%, in line with a Dow Jones poll before the decision.
The bank noted that while inflation has edged down, it remains high and underlying inflation has remained elevated, so a somewhat higher policy rate is needed to bring inflation back to target.
Activity in the Norwegian economy remains high, and the labour market is tight, while at the same time the policy rate is having a tightening effect and pressures in the economy are easing, the bank added.
“The future policy rate path will depend on economic developments. If the economy evolves as currently anticipated, the policy rate will be raised further in September,” Governor Ida Wolden Bache said.
No new projections were announced Thursday, but the central bank’s most recent rate path presented in June indicated 25 basis-point increases in both August and September to a peak of 4.25%.
Write to Dominic Chopping at [email protected]
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