Norges Bank Lifts Key Rate, Sees a Further Raise in December
September 23 2021 - 4:54AM
Dow Jones News
By Dominic Chopping
Norges Bank on Thursday became the first major central bank to
raise interest rates after the Covid-19 pandemic, lifting its key
rate to 0.25% from zero while suggesting a further raise later this
year.
The raise marks the first move since the Norwegian central bank
cut it to zero in May last year as the pandemic took hold.
"A normalizing economy now suggests that it is appropriate to
begin a gradual normalization of the policy rate," Governor Oystein
Olsen said, while also noting the bank wanted to counter the
buildup of financial imbalances created by low rates.
"Based on the Committee's current assessment of the outlook and
balance of risks, the policy rate will most likely be raised
further in December," he said.
The central bank said the reopening of society has led to a
marked upswing in the Norwegian economy, and activity is now higher
than its pre-pandemic level.
The bank also raised its rate path given higher capacity
utilization and inflation prospects, driven by a weaker krone and
higher wage growth projections.
The new rate path implies that the policy rate will rise
slightly faster and end at a slightly higher level than previously
projected, with a policy rate of 1.7% seen toward the end of
2024.
Write to Dominic Chopping at dominic.chopping@wsj.com
(END) Dow Jones Newswires
September 23, 2021 04:39 ET (08:39 GMT)
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