Bank of Norway Hikes Interest Rate

June 23, 2022

The Bank of Norway’s policy interest rate was hiked by 50 basis points to 1.25%. From a base of zero percent during the worst of the pandemic, the rate had previously undergone three 25-basis point increases last September, December, and March, and analysts were anticipating a fourth increase of that smaller size. In a released statement, central bank officials explained that

Prospects for a more prolonged period of high inflation suggest a faster rise in the policy rate than projected earlier. A faster rate rise now will reduce the risk of inflation remaining high and the need for a sharper tightening of monetary policy further out.

The Bank of Norway statement goes on to suggest that 1.25% is still too low and that another increase is likely in August and that an ultimate increase to 2.0% by 3Q 2023 may be needed.

Copyright 2022, Larry Greenberg. All rights reserved. No secondary distribution without express permission.

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