{"id":121890,"date":"2021-09-26T12:28:20","date_gmt":"2021-09-26T12:28:20","guid":{"rendered":"https:\/\/fin2me.com\/?p=121890"},"modified":"2021-09-26T12:28:20","modified_gmt":"2021-09-26T12:28:20","slug":"norges-bank-raises-rate-for-first-time-since-2019-signals-december-hike","status":"publish","type":"post","link":"https:\/\/fin2me.com\/economy\/norges-bank-raises-rate-for-first-time-since-2019-signals-december-hike\/","title":{"rendered":"Norges Bank Raises Rate For First Time Since 2019, Signals December Hike"},"content":{"rendered":"
Norway’s central bank raised its key interest rate for the first time in two years on Thursday, in line with the guidance in previous months, and signaled a further hike in December, citing a normalizing economy<\/span> after the Covid-19 pandemic.<\/p>\n The Monetary Policy and Financial Stability Committee unanimously decided to raise the policy rate from zero percent to 0.25 percent, Norges Bank said in a statement. The decision was in line with economists’ expectations.<\/p>\n The previous change in the rate was a quarter-point reduction to zero percent in May last year at the peak of the pandemic.<\/p>\n The latest hike was the first since September 2019, when the rate was raised by 25 basis points to 1.50 percent.<\/p>\n “A normalizing economy now suggests that it is appropriate to begin a gradual normalization of the policy rate,” Norges Bank Governor Oystein Olsen said.<\/p>\n “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,” Olsen added.<\/p>\n Policymakers assessed that the economic activity is now higher than its pre-pandemic level, driven by the marked upswing after the reopening of society.<\/p>\n Unemployment has eased further and a large proportion of the adult population is now vaccinated against the coronavirus<\/span> thus reducing the risks from a resurgence in infections rates.<\/p>\n Uncertainty regarding the global economic outlook and the concerns over the Delta variant have affected the krone exchange rate, which has been weaker than projected in June, the bank said.<\/p>\n Policymakers judged that the risk of inflation becoming too high is limited, the bank said.<\/p>\n Higher capacity utilization and higher inflation prospects have led to a somewhat higher policy rate forecast compared with the June forecast, the Norges Bank said.<\/p>\n The bank forecast policy rate to be 1 percent one year ahead and 1.7 percent towards the end of 2024.<\/p>\n The bank projected core inflation to hover around 1 percent in the coming period, before rising to close to 2 percent towards the end of 2024.<\/p>\n Annual mainland GDP growth was projected at 3.9 percent this year, after a 3.1 percent contraction in 2020. High GDP growth is also expected to continue next year, before decelerating to about 1 percent in 2023 and 2024.<\/p>\n “Barring any further unwelcome surprises on Covid-19, we expect another rate hike in both December and March 2022,” ING economist James Smith said.<\/p>\n “The jury’s out on whether we see an additional one or two moves in the latter half of next year.” <\/p>\n