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Norway’s central bank says rate rise ‘likely’ in September

Norway’s central bank says rate rise ‘likely’ in September

Norways’s central bank on Thursday said that it expects to raise rates in September, sending the krone zipping higher against the euro. 

The Norges Bank said the “upturn in the Norwegian economy is continuing”. While underlying inflation is lower than the bank’s target, “rising capacity utilisation implies an increase in price and wage inflation further out.”

“The executive board’s current assessment of the outlook and balance of risks suggests that the key policy rate will most likely be raised in September 2018”, said Governor Oystein Olsen.

Last month, the central bank said rates were “most likely be raised after summer 2018.”

Mr Olsen’s comments come after the central bank on Thursday chose to leave its benchmark rate on hold, matching the expectations of nearly every economist in a recent Reuters poll. 

The news sent theNorwegian krone rising against the euro. It was recently up 0.57 per cent, with one unit of the common currency buying NKr9.417.

“An unchanged rate path (ie cementing a September hike) should result in a stronger krone and a tad higher short rates,” said Erica Blomgren, fixed income strategist at SEB.