By Dominic Chopping
Norway's central bank raised its key policy rate to 2.25% from 1.75% on Thursday, and said it will most likely raise the rate further in November.
Analysts polled by The Wall Street Journal had expected the central bank to raise its key rate to 2.25%.
Norges Bank changed its rate path slightly, suggesting it will raise rates a little sooner than previously projected, but the peak rate of around 3.25% remains the same. It expects the policy rate to rise to around 3% over the course of the winter.
"Inflation is markedly above our target of 2%, and there are prospects that inflation will remain high for longer than projected earlier. We are raising the policy rate with the aim of bringing down inflation," Governor Ida Wolden Bache said.
However, the central bank said there are now clear signs of a cooling economy with monetary policy starting to have a tightening effect, which may suggest a more gradual approach to policy rate setting ahead.
Norges Bank noted that many will be facing a squeeze on finances, but a faster rate rise now reduces the risk of inflation becoming entrenched at a high level.
The move comes as central banks across the world use aggressive monetary policy tightening in efforts to contain soaring inflation.
Scandinavian neighbor Sweden surprised markets with a 100 basis-point hike Tuesday to 1.75%, while the U.S. Federal Reserve on Wednesday raised its benchmark rate by 75 basis points to between 3% and 3.25% and projected a rise to at least 4.25% by the year's end.
The Swiss National Bank exited negative rates earlier Thursday with a 75 basis-point hike to 0.5% and the Bank of England is expected to hike 50 basis points to 2.25% later today.
Write to Dominic Chopping at dominic.chopping@wsj.com
(END) Dow Jones Newswires
09-22-22 0621ET
