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Norway raises interest rates with first hike by major central banks

Central Bank Updates

The Norges Bank of Norway said it would be the first central bank in the world to raise interest rates after the Covid-19 pandemic, and that interest rates would soon be raised further.

Banks rose 0.25 percentage points from a record low of zero on Thursday because of the need to counter pre-pandemic levels of economic activity and the buildup of financial imbalances. It shows another rise in December, with interest rates reaching around 1.7% by the end of 2024.

Other Western central banks are at different times to begin tightening their policies, despite the rapid economic recovery and some economists’ anxiety. Rising inflation.. Iceland, South Korea, Brazil Although we have already raised interest rates, Norway is the first country to belong to the group of the 10 most traded currencies.

Some policy makers The Federal Reserve Board (FRB) said Wednesday that it expects the first rate hike next year, but Sweden’s Rixbank confirmed this week that it will remain zero until at least late 2024. Percent, the central bank said Thursday.

Norway, home to the world’s largest sovereign wealth fund with $ 1.4 trillion in assets, has rebounded sharply from the first wave of Covid last year when the Norges Bank cut interest rates by 1.5 points in the coming weeks.

Governor Oystein Olsen pointed out that the Fed is soon beginning to overturn “a very expansive policy.” He said at a press conference: After that, it is okay to start the gradual normalization of the policy rate. In other countries, there are different policy considerations. “

Norway currently has a low underlying inflation rate, but the central bank predicts it will approach its 2% target, thanks to wage growth and economic strengthening.

The central bank has determined that “the risk of inflation becoming too high is limited,” and said it would raise rates up to five more times by the end of next year. “Another hawkish trend” was the judgment of an analyst in Nordia, the largest lender in the Nordic region.

The central bank expects the economic recovery to continue until fall, with higher capacity utilization, higher Covid vaccination rates and a drop in unemployment to just 2.7% of the workforce.

“The purpose of countering the accumulation of financial imbalances also suggests higher interest rates,” he warned. “Uncertainty surrounding the effects of high interest rates guarantees a gradual rise in policy rates.”

Norges Bank also mentioned the emergence of new Covid variants and how they affect the economy, but rebounds continue as households spend on savings, especially services, generated during the pandemic. I expect it.

Norway raises interest rates with first hike by major central banks

Source link Norway raises interest rates with first hike by major central banks

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