The Norges Bank Monetary Policy and Financial Stability Committee unanimously decided to keep the main interest rate unchanged at 2,75%.
Consumer prices have increased significantly and price increases are clearly above target. The Norwegian economy is highly active and the labor market is tight. Tall price increases and increased interest rates weaken the purchasing power of households, and many companies expect a decline in activity in the future.
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As the committee is currently assessing the outlook, further increases in the interest rate will be necessary to bring inflation on target. Since the publication of Monetary Policy Report 4/22, it appears that the situation on the labor market has been somewhat tighter than expected. Continued high pressure in the Norwegian economy may help keep prices rising. This may mean raising interest rates. On the other hand, there are prospects for lower energy prices than previously expected, and international price impulses seem to be weakening. Interest rates were raised significantly in a short period of time and monetary policy began to tighten the economy. This could mean a more gradual move forward in setting interest rates.
The outlook for the Norwegian economy is more uncertain than normal
– The further development of the interest rate will depend on economic development. Most likely, we will raise interest rates in March, says Central Bank governor Ida Wolden Bache.
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Source: Norges Bank
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