December 8, 2022

COPENHAGEN, Denmark (AP) – Norway’s central bank on Thursday raised its key interest rate by a quarter of a percentage point to 2.25%, as other banks around the world also move to lower inflation.

The Norges Bank said inflation – which stood at 6.5% in August – “has risen rapidly over the past months and has been much higher than expected”.

“Inflation is significantly above our 2% target, and chances are that inflation will remain elevated for longer than previously forecast,” Bank Governor Ida Waldenbach said in a statement.

The central bank added that there are “clear indications of a slowdown in the economy. Reducing pressures in the economy will contribute to curbing inflation further.”

Norges noted that “a faster rate hike now will reduce the risk of inflation entrenching at a high level and the need for sharper monetary policy tightening.”

She said the interest rate is likely to be raised further in November.

It comes as central banks around the world are making big rate hikes to tackle inflation, which has risen as the global economy has recovered from the COVID-19 pandemic and has been hit by the fallout from the Russian war in Ukraine.

On Wednesday, the US Federal Reserve Raising interest rates three-quarters of the point price for the third time in a row. On a busy day for central banks, Swiss monetary policy makers made the largest ever increase in the key interest rate Thursday, as the Bank of England comes under pressure to act aggressivelyvery.

Earlier this month, the European Central Bank also raised the interest rate three-quarters of a point. Norway is not part of the European Union.

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