Policy rate raised to 3.25 percent
Norges Bank's Monetary Policy and Financial Stability Committee unanimously decided to raise the policy rate by 0.25 percentage point to 3.25 percent. Based on the Committee's current assessment of the outlook and balance of risks, the policy rate will most likely be raised further in June.
The Committee assesses that a higher policy rate is needed to dampen inflation. Inflation is high and markedly above the target of 2 percent. Growth in the Norwegian economy has slowed, but activity remains high. The labour market is tight, and wage growth is set to be higher in 2023 than last year.
The future policy rate path will depend on economic developments. Since the March Report, economic activity has been broadly in line with expectations. Underlying inflation has been as projected. Higher wage growth and the krone depreciation will contribute to keeping inflation elevated ahead.
“If the krone remains weaker than projected or pressures in the economy persist, a higher policy rate than envisaged earlier may be needed”, says Governor Ida Wolden Bache.
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