Norway central bank raises rate, one more hike ‘likely’

OSLO  -Norway’s central bank raised its key interest rate on Thursday, its 13th increase in two years, and warned that one more hike is “likely” in December as inflation remains too high.

“Persistently high inflation imposes substantial costs on society,” the bank said in a statement after announcing that the policy rate was raised by a quarter point to 4.25 percent.

“Whether additional tightening will be needed depends on economic developments. There will likely be one additional policy rate hike, most probably in December,” said Norges Bank Governor Ida Wolden Bache.

The bank forecast the policy rate to rise to 4.5 percent and stay at that level through 2024, suggesting that no cuts are in the cards next year.

“There will likely be a need to maintain a tight stance for some time ahead,” Wolden Bache said.

Norwegian inflation has slowed to 4.8 percent in August, but it remains well above the central bank’s two-percent target, while the national currency has weakened, making imports more expensive.

The decision came on a busy day for central banks, with Sweden also hiking its rate and Switzerland pausing its monetary cycle.

The Bank of England will announce later Thursday whether it will hike its rate again or hit pause after a surprise dip in inflation in August.

The US Federal Reserve decided on Wednesday to hold its interest rates steady, although it also said another hike is likely this year.