By Scott Kanowsky
Investing.com — Norway’s central bank hiked by 50 basis points on Thursday, becoming the latest global monetary policy maker to move aggressively in a bid to rein in soaring inflation.
Norges Bank said the unanimous decision to raise its policy rate to 1.25% from 0.75% came amid worries that prices may continue to rise due in part to tight spare capacity in the Norwegian economy and a weaker local currency.
“A faster rate rise now will reduce the risk of inflation remaining high and the need for a sharper tightening of monetary policy further out,” said Norges Bank Governor Ida Wolden Bache in a statement.
The central bank added that borrowing costs will “most likely be raised” even further to 1.5% in August. It also revised up its monetary policy forecast, saying it now predicts a potential uptick in interest rates to around 3% by summer 2023.
The move comes after a slew of central banks around the world – including the Federal Reserve, Bank of England, and the Swiss National Bank – unveiled rate hikes recently to cool red-hot inflation. Meanwhile, the European Central Bank has also signaled its intention to increase borrowing costs at its July meeting.