Norges Bank decided on Thursday to raise the official interest rate from 4% to 4.5%, considering it "necessary to tighten monetary policy for inflation to return to target within a reasonable timeframe."
"Inflation has been above target for several years. By raising the monetary policy rate, we are contributing to reducing inflation. It is likely that it will be necessary to maintain this rate at elevated levels for some time, and the Committee is prepared to raise it even further if necessary to bring inflation to the 2% target within a reasonable timeframe," says Governor Ida Wolden Bache.
Additionally, she notes that, in its June monetary policy meeting, the Committee "estimated that it would likely be necessary to raise the monetary policy rate at one of the upcoming meetings."
"During the summer, underlying inflation moderated and was below expectations. However, longer-term inflation prospects do not appear to have changed substantially," she adds.
For its part, Sweden's central bank, the Riksbank, has decided to keep the monetary policy rate unchanged at 1.75%, although it highlights that "economic activity is more solid and supply shocks persist."
"Consequently, the Executive Board estimates that, looking ahead, the monetary policy rate will need to rise more than expected in the June projections for inflation to stabilise around 2%. If inflation and economic activity prospects remain unchanged, increases in the monetary policy rate are expected to begin this year," it concludes.
