OSLO — Norway’s central bank raised its benchmark interest rate by 50 basis points (bps) on Thursday, as expected by most economists and said it will likely hike again in September after inflation soared well above forecast.
Norges Bank’s monetary policy committee raised the sight deposit rate to 1.75% from 1.25%, exceeding its own forecast made in June of a hike to 1.50%.
“A markedly higher policy rate is needed to ease the pressures in the Norwegian economy and to bring inflation down towards the target,” Governor Ida Wolden Bache said in a statement.
Of the 22 economists polled by Reuters in advance of Thursday’s announcement, 14 had predicted Norges Bank would hike by 50 basis points (bps) to 1.75%, while eight said a 25 bps increase was the most likely outcome.
The Norwegian currency, the crown, rose to 9.86 against the euro at 0808 GMT from 9.88 just before the rate announcement. (Reporting by Victoria Klesty, editing by Terje Solsvik)