Norway Central Bank Hikes Interest Rate, Warns of Potential Further Increases

Norges Bank, Norway's central bank, raised its policy interest rate by 25 basis points to 4.50% on Thursday as expected by a narrow majority of analysts in a Reuters poll.

The decision was made to contain inflation, with Governor Ida Wolden Bache stating that 'it will likely be necessary to keep the policy rate elevated for a time, and the committee is prepared to raise the policy rate further if needed to bring inflation down to the 2% target within a reasonable time horizon.'

The Norwegian crown strengthened to 10.76 against the euro at 0806 GMT after the announcement.

Norges Bank raised rates by 25 basis points in May, moving sooner than most analysts had expected, but said in August that the future path of monetary policy would 'depend on economic developments', casting some doubt on the way forward.