Nordic Central Banks Join Global Rate-Hiking Cycle Amid War-Driven Inflation

Norway's central bank raised interest rates on Thursday, following in the footsteps of other global policymakers grappling with rising inflation from a war-driven energy shock. Sweden's central bank also signalled it was likely to follow suit before the end of the year.

The two Nordic central banks warned that higher fuel prices due to the Middle East conflict risk slowing the return of inflation to their 2% target. 'By raising the policy rate, we are helping to reduce inflation,' said Norges Bank's Governor Ida Wolden Bache.

Sweden's Riksbank left rates unchanged but said it would likely tighten policy before year-end. Denmark's central bank, which keeps its currency pegged to the euro, has already moved.

'If the outlook for inflation and growth remains the same, the policy rate will rise before the end of the year,' said Sweden's central bank Governor Erik Thedeen.