– As we now assess the outlook and the risk picture, the key policy rate will most likely be raised further to 1.5 per cent in August, says central bank governor Ida Wolden Bache in a press release. In advance, the question was not whether the interest rate would rise, but how much it would rise. Many chief economists and analysts expected Norges Bank to stick to the “usual” and raise interest rates by 0.25 percentage points. But several thought Norges Bank would step in with a double and raise interest rates by 0.5 percentage points. The latter is seldom a commodity. Not since 3 July 2002 has Norges Bank raised interest rates by more than «one quarter». Several warning lights flash red The interest rate is the central bank’s tool for controlling the temperature in the Norwegian economy. Recently, several meters have shown that it is starting to get quite hot here on the rock. Earlier in June, Statistics Norway announced that we have the highest price growth since 1988. In one year, prices had risen by 5.7 per cent – far above Norges Bank’s target of a 2 per cent rise in price over time. Companies are also noticing that it is starting to boil. Norges Bank’s own survey shows that in addition to high inflation, companies are noticing: Lack of labor Shortage of goods and input factors All of this is a sign that wages and prices are being pushed up at an alarming pace. It is to curb this that Norges Bank raises interest rates. One of the bank’s most important tasks is to prevent wage and price spirals from creating chaos in the economy. Then it is important to be on the ball before it is too late.
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Norges Bank raises the key interest rate and raises the interest rate path – news Norway – Overview of news from different parts of the country
