Norway's central bank raises policy rate to 4.25%

Norway's central bank (Norges Bank) has increased its benchmark interest rate from 4.0 percent to 4.25 percent on Thursday to curb inflation, reported Xinhua.

Norges Bank Governor Ida Wolden Bache told reporters that the country's current inflation rate remains significantly above the targeted 2 percent.

In Norway, prices have increased for a range of goods and services. According to official figures, the 12-month rise in the consumer price index (CPI) was 4.8 percent in August, higher than expected.

"Persistently high inflation imposes substantial costs on society. A somewhat higher interest rate is imperative to align inflation with the target within a feasible timeframe," Bache said.

She said challenges prevail in the labor market with its continuing tightness. Increased business and labor costs in the last few years are projected to increase inflation further.

"There's growing concern that if inflation remains high for an extended period, the subsequent effort and cost to stabilize it will have to intensify," she said.

The governor warned of an additional policy rate hike in December. "There will likely be a need to maintain a tight stance for some time ahead," Bache said.