COPENHAGEN, Denmark (AP) — Norway’s central bank raised its key benchmark interest rate by a quarter of a percentage point to 2.25% on Thursday, as other banks around the world also try to reduce inflation.
Norges Bank said that inflation — which reached 6.5 percent in August — “has risen sharply over the past months and is far higher than projected.”
“Inflation is well above our 2% target and there is a prospect that inflation will remain high longer than previously projected,” Governor Ida Wolden Bache said in a statement.
The Central Bank added that “now there are clear signs of the economy cooling down.” Easing the pressures in the economy will contribute to the further suppression of inflation.”
Norges Bank noted that “faster rate rises now will reduce the risk of inflation becoming entrenched at a high level and the need for more severe monetary policy tightening going forward.”
The reference rate will most likely be raised further in November, it said.
It comes as central banks around the world are raising rates significantly to tackle inflation, which has risen as the global economy has recovered from the COVID-19 pandemic and then been hit by the fallout from Russia’s war in Ukraine.
On Wednesday, the US Federal Reserve raised interest rates by three quarters of a point for the third time in a row. In a busy day for central banks, Swiss monetary policymakers delivered the biggest-ever hike in the key interest rate Thursday, as the Bank of England comes under pressure to act aggressivelyalso.
Earlier this month, the European Central Bank also raised its interest rate by three quarters of a point. Norway is not part of the European Union.