Norway's central bank, Norges Bank, announced on Thursday that it has raised its key policy rate by 25 basis points to 4.0%. This move was in line with expectations and the bank's aim to tackle inflation that remains above target.
Despite a slight decrease in inflation, it is still at elevated levels, and underlying inflation remains high as well. To bring inflation back to target, the central bank believes that a somewhat higher policy rate is necessary.
The Norwegian economy has continued to perform well, with robust activity and a tight labor market. However, the policy rate has been tightening, leading to easing pressures in the economy.
Governor Ida Wolden Bache stated that the future path of the policy rate will depend on economic developments. If the economy behaves as expected, the central bank plans to raise the policy rate further in September.
Although no new projections were released during this announcement, the central bank's rate path from June suggested two more 25 basis-point increases in August and September, reaching a peak of 4.25%.