Norway central bank raises rate to 3.25%, eyes hike in June

Norway’s central bank has raised its benchmark interest rate by 25 basis points (bps) to 3.25% today to curb inflation, in line with expectations, and said it would likely hike it again in June.

All 26 economists polled in the April 21-26 period has expected a 25-basis-point hike today, and all but one of the economists believed the rate will rise to 3.5% in June.

Rates could also continue to rise to counter the effects of a weak Norwegian currency, the central bank said.

“If the krone remains weaker than projected or pressures in the economy persist, a higher policy rate than envisaged earlier may be needed,” Norges Bank Governor Ida Wolden Bache said in a statement.

Norway’s core inflation, which excludes energy costs, stood at 6.2% in March, and has remained above the bank’s 2% target since February last year.

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