Norges Bank's Monetary Policy and Financial Stability Committee unanimously decided to raise the key interest rate by 0,25 percentage points to 3,25 percent. As the committee is currently evaluating the outlook and risk picture, the key interest rate is likely to be raised in June.
In the committee's opinion, a higher rate is needed to reduce inflation interest rate. Price inflation is high and well above the 2% target. Growth in the Norwegian economy has slowed, but activity is still high. The labor market is tight and wage growth appears to be higher than last year.
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The further course of the interest rate will depend on economic development. Since the publication of the Monetary Policy Report 1/23, economic activity has been more or less in line with expectations. The underlying price increase was in line with expectations. The increase in wage dynamics and the weakening of the koruna will help keep prices up in the future.
“If the koruna remains weaker than we assumed or the pressure on the economy continues, a higher interest rate than we previously assumed may be necessary,” says Central Bank Governor Ida Wolden Bache.
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Source: Norges Bank
