Norway to hike rates by 50 basis points
Norway's central bank is expected to raise its benchmark interest rate again this week and signal a continued rise in the cost of borrowing in the fourth quarter to combat inflation, a Reuters poll showed on Monday.
Of the 30 economists surveyed, 28 predicted Norges Bank will hike by 50 basis points (bps) on September 22 to a rate of 2.25 per cent, the highest level since 2011.
One forecaster said a 25 bps increase to 2.0 per cent was the most likely outcome, while another predicted a rise of 75 bps to 2.50 per cent.
Central banks globally are struggling to contain inflation in the wake of the pandemic and the Ukraine war, leading to sharp rate hikes.
Norway's August consumer prices rose 6.5 per cent year-on-year even though the government has partly capped soaring electricity bills. Core inflation, which excludes energy, meanwhile stood at 4.7 per cent, exceeding the central bank's goal of 2.0 per cent.
A majority of participants in the Reuters poll now say rates will likely hit 2.75 per cent by the end of the year, well above the 2.25 per cent projected by the central bank in June.
Norges Bank last raised rates in August, by 50 basis points, and said it would likely hike again in September without indicating how big that increase would be.
Handelsbanken Capital Markets predicted that the monetary policy committee this week would deliver another 50-point hike, but said the market was pricing in a high probability of 75 points.
"Further ahead, we believe that Norges Bank will fully indicate that the policy rate will be hiked to 2.75 per cent by the end of this year, although there is a significant chance that it will rise to 3.0 per cent," Handelsbanken said.
The central bank last week released a business's survey indicating a weaker outlook for companies.
The Reuters poll predicted that Norges Bank could begin cutting its policy rate in 2024.