Jabar Ekspres – Norway’s central bank has decided to raise its policy rate by 0.25 percentage points to 4.0 percent, in an effort to bring inflation down to the target level.
Ida Wolden Bache, Governor of the Central Bank of Norway (Norges Bank), announced the decision on Thursday (17/8/2023) in a press conference.
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She said the central bank’s main task is to maintain low and stable inflation, with an operational target close to 2.0 percent over time. In addition, he was mandated to support a high level of employment and promote economic stability.
“In July, consumer prices were 5.4 percent higher than one year earlier. Excluding energy prices, inflation now stands at around 6.5 percent, which is well above our target,” Bache said.
High and variable inflation significantly impacts individuals, businesses and society as a whole. “It makes planning more challenging and affects price perceptions, eroding the purchasing power of households, especially low-income families who are more affected by sudden price increases,” he said.
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He said the future path of interest rate policy will depend on economic developments. If the economy develops as currently anticipated, the policy rate will be raised further in September.
“If the (Norwegian) krona proves weaker than previously projected or pressures in the economy persist, higher policy rates may be needed to bring down inflation,” Bache said.
