Norway central bank raises key borrowing rate

Bloomberg

Norway’s central bank raised borrowing costs to the highest level in more than a decade, and signaled it still plans to hike its key interest rate to 3% at the beginning of next year even as the Nordic country faces a recession.
Norges Bank lifted its key deposit rate by 25 basis points to 2.75%, the highest level since February 2009, as forecast by all analysts in a Bloomberg survey. It said the rate “will most likely be raised further in the first quarter of next year.”
Analysts called its new rate path more hawkish than expected, penciling in a hike to 3% early next year with a potential further increase to come.
Norway’s economic outlook is souring and inflation has slowed from a 35-year high after policy makers in June opted for the fastest rate hikes in two decades to contain price growth.
Still, the central bank forecasts the economy will avoid a hard landing, giving it the confidence to carry out its tightening plans.
“The forecasts for the Norwegian economy are more uncertain than normal, but if the economy evolves as anticipated, the policy rate will be around 3% next year,” Governor Ida Wolden Bache said.