By Dominic Chopping
Norway’s central bank raised its key policy rate to 2.50% from 2.25% on Thursday, and said it will most likely raise the rate further in December.
A majority of analysts polled by The Wall Street Journal had expected the central bank to raise its key rate to 2.50%, while several had expected a 50 basis-point hike to 2.75%.
No new forecasts were presented, but the central bank said that with an outlook that is more uncertain than normal, the future policy rate path will depend on how the economy evolves.
Norges Bank said that inflation has increased more than projected, and the labor market appears to be a little tighter than previously anticipated, both of which could have suggested raising the policy rate even higher Thursday.
However, there are signs that some areas of the economy are cooling down, and prospects for lower-than-expected freight and energy prices may curb inflation ahead, it said.
“The policy rate has been raised markedly over a short period, and monetary policy is beginning to have a tightening effect on the economy,” the central bank said.
“This may suggest a more gradual approach to policy rate setting.”
Write to Dominic Chopping at [email protected]
