Norges Bank Raises Interest Rate to 4.50 Percent

The Norges Bank raised its benchmark interest rate by a quarter-point to 4.50 percent on September 24 to combat persistent inflation. This action follows a previous quarter-point increase implemented in May.

Governor Ida Wolden Bache stated that the policy rate must remain elevated to bring inflation down to the 2 percent target. She noted that the bank is prepared to implement further increases if necessary. While recent inflation figures have fallen below the bank's forecasts, they remain above target due to higher wages and soaring energy costs linked to the war in Iran. Underlying inflation stood at 3 percent in August.

The announcement led to a strengthening of the Norwegian krone. Higher rates increased the attractiveness of Norwegian bonds and assets for international investors.