The monetary policy and financial stability committee of Norges Bank decided at its meeting on September 20 to raise the basic interest rate from 4,0 to 4,25%.
– Whether it will be necessary to further increase interest rates will depend on economic development. We will probably raise the main again interest rate, most likely in December, says central bank president Ida Wolden Bache.
Price inflation is high and well above the 2% target. Persistently high price increases have high costs for society. The Commission considers that a slightly higher interest rate is necessary to bring price dynamics to the target level within a reasonable time.
Also read: Elections 2023 – District Electoral Commissions in Norway
The prime interest rate will remain around 4,5 percent throughout next year
Growth in the Norwegian economy has slowed, but the labor market remains tight. Business costs have increased significantly in recent years and there are prospects that wage costs will increase more than previously estimated. This will help keep prices rising in the future. Lowering prices later may prove more expensive. On the other hand, interest rates have been raised significantly in a short period of time and monetary policy is now having an impact on the economy. The Commission does not want to raise interest rates more than necessary to overcome high price increases.
The policy rate forecast has been revised slightly upwards compared to Monetary Policy Report No. 2/23 and indicates that the policy rate will remain at around 4,5 percent throughout next year.
– There will likely be a need to keep interest rates stable for a longer period of time, says central bank governor Ida Wolden Bache.
There is uncertainty about economic development and how low interest rates currently are. If pressure in the economy continues or the krona is weaker than expected, price inflation may remain high for longer than we currently expect. Then we are ready to raise interest rates more than we currently estimate. If we experience a stronger slowdown in the Norwegian economy or inflation falls faster, the interest rate may be lower than we currently assume.
Like us on Facebook and share our post with others
Source: fylke Innlandet
Also read: Elections 2023 – District Electoral Commissions in Norway
