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Norway central bank hikes key policy interest rate to 0.75%

March 24, 2022 GMT

COPENHAGEN, Denmark (AP) — Norway’s central bank raised its key policy interest rate from 0.5% to 0.75%, saying Thursday that “the war in Ukraine has led to heightened uncertainty” but the Norwegian economy still holds prospects for “a continued upswing.”

Norges Bank said it “was concerned with the prospect that the war in Ukraine could result in weaker-than-expected global growth amid rising inflation” but also “with the risk of accelerating price and wage inflation as a result of capacity constraints in the economy and persistent global price pressures.”

“If there are prospects of persistently high inflation, the policy rate may be raised more quickly,” the bank said in a statement.

Norges Bank Governor Ida Wolden Bache said the lifting of Norway’s coronavirus measures has led to increased economic activity, including increased employment and above-average capacity utilization.

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Wolden Bache added that the policy rate will most likely be raised further in June.

Norges Bank said the policy rate forecast is higher than it was in December Report and indicates an increase to around 2.5% at the end of 2023.

Norway is not a member of the European Union.

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This story has been corrected to show that Ida Wolden Bahe is Norges Bank’s governor, not deputy governor.