NORWAY’S central bank said today it was raising its main interest rate to 4%, its 12th hike in less than two years, and said another raise was expected next month.

“Consumer price inflation has edged down but remains high and markedly above the target,” Norges Bank said in a statement.

Like many countries, Norway has been struggling with high inflation since the end of the Covid pandemic and Russia’s invasion of Ukraine.

Last month, core inflation – which excludes energy prices and tax changes, the indicator used by the central bank to guide its monetary policy – was at 6.4% year-on-year, well above the bank’s target of around 2%.

In September 2021, Norges Bank was one of the first in the Western world to start raising its key rate and it is now at its highest level since the end of 2008.

“If the economy evolves as currently anticipated, the policy rate will be raised further in September,” said Ida Wolden Bache, governor of Norges Bank. 

In June, the bank had signalled that the rate should peak at 4.25% this autumn. However, some economists believe it could go higher if inflation persists. – AFP, August 17, 2023.