Norway Central Bank Lifts Key Rate to 4.25%; Open to Further Hike in December

By Dominic Chopping

Norway's central bank raised its key policy rate on Thursday and said that another increase is likely later in the year, depending on developments.

Norges Bank increased its key policy rate by 25 basis points to 4.25%, in line with a Dow Jones poll before the decision.

"Whether additional tightening will be needed depends on economic developments. There will likely be one additional policy rate hike, most probably in December," Governor Ida Wolden Bache said.

The central bank said its rate forecast has been revised up a little, with the rate now probably reaching a peak of around 4.5% in December and remaining around that level through 2024. It had previously indicated that Thursday's rate rise to 4.25% would be the last.

The bank noted that inflation is still too high and markedly above the 2% target, so a somewhat higher interest rate is needed to bring inflation down to target within a reasonable horizon and ensure inflation doesn't become entrenched.

"There will likely be a need to maintain a tight stance for some time ahead," Governor Bache added.

Central bank decisions have dominated markets over the past week. On Wednesday, the U.S. Federal Reserve held steady, while the Bank of England is due to decide on rates later Thursday, along with Turkey and South Africa. A week ago, the European Central Bank opted to raise rates as it continues to battle sticky inflation.

Write to Dominic Chopping at [e-mail]

(END) Dow Jones Newswires

09-21-23 0437ET