August 22, 2022
As inflation surges, Norway’s central bank increased its benchmark interest rate by 50 basis points and said that a future increase is anticipated in September.
The Norges Bank’s sight deposit rate has increased from 1.25% to 1.75%, above its June prediction. Norway’s annual inflation rate increased to 4.5% in July from 3.6% in June, exceeding consensus expectations of 3.8%.
The Norges Bank monetary policy committee stated in its decision notice that economic activity in Norway remained robust, with little room for expansion, and that unemployment has continued to decline and is now at a very low level.
The recent broadening of price increases was also noted by policymakers, which may indicate that inflation will continue high for longer than initially anticipated. A quicker rate increase today, according to the central bank, would lessen the possibility of high inflation becoming “entrenched,” which would need a more pronounced tightening of monetary policy in the future.
Source: CNBC
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