Norway raises rate to 4.25%, likely to hike again in Dec
By Terje Solsvik
OSLO (Reuters) — Norway's central bank raised its benchmark interest rate by 25 basis points (bps) to 4.25% on Thursday to curb inflation, as widely predicted, and, in a surprise move, said it would likely hike again in December.
All 30 economists polled in advance by Reuters expected a 25-basis-point hike on Thursday, and a majority of participants had predicted that this would mark the peak of Norges Bank's two-year campaign of tightening.
«There will likely be one additional policy rate hike, most probably in December,» Governor Ida Wolden Bache said in a statement.
The policy rate was forecast to stay around 4.50% through 2024, the central bank added.
Only five economists in the Reuters poll had expected rates to hit 4.50% this year.
The crown strengthened to 11.49 against the euro at 0820 GMT, from 11.52 just before the announcement.
Norway's annual core inflation, which excludes energy costs, stood at 6.3% in August, down from a June peak of 7.0%, and has remained above the bank's 2% target since February 2022.
In 2024, core inflation is now expected to decline to 4.7%, Norges Bank said, up from a previous forecast of 4.6% made in June.
«The outcome of this meeting was clearly on the hawkish side. Higher wage growth and higher inflation for longer are the key reasons behind the upward adjustment to the rate path,» analysts at Nordea Markets said in a note.
Although weak by historical standards, the Norwegian crown has strengthened since June on a trade-weighted basis by about 6% against a broad basket of currencies.
Sweden's Riksbank earlier on Thursday raised rates by 25 basis points to 4.0% and said it expected to hike again, while the Swiss National Bank kept rates on hold but kept the door
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