Norges Bank is following its plan – it is keeping the key interest rate unchanged in November. The next interest rate hike is expected in December.
The information was announced by Norges Bank’s Committee on Monetary Policy and Financial Stability in a press release on Thursday.
“The committee’s assessment is that the normalization of the economy indicates that it will be appropriate to increase the key interest rate further… Due to the uncertainty about the effects of higher interest rates, the key policy rate will be raised gradually.”
Norges Bank points out that the reopening of society has given a marked upswing in the Norwegian economy, that unemployment is falling, and that inflation is high. However, underlying inflation is lower than the inflation target.
In the future, increased activity in the economy and rising wage growth will probably contribute to raising underlying inflation, but the recent strengthening of the krone may dampen the rise in prices, Norges Bank writes.
It also points out that there is still uncertainty about the further course of the pandemic and its effects on the Norwegian economy.
“The infection has increased again recently, but a high degree of vaccination will probably limit the need for new austerity measures.”
The committee is also concerned that disruptions in international production chains could dampen the economic upswing and contribute to higher price inflation in Norway.
Economists expect Norges Bank to follow its plan and raise the interest rate by 0.25% in December – to 0.5%. They point out that registered unemployment has continued to fall in line with Norges Bank’s estimates.
During the pandemic, which triggered the largest setback for the Norwegian economy since the war, interest rates have been at a record low of 0%. The interest rate was raised in September for the first time since May 7, 2020.
During the previous interest rate meeting, Norges Bank stated that the plan for the coming year is for the key rate to be gradually raised.
Source: © NTB Scanpix / #Norway Today / #NorwayTodayFinance
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