Norway makes the unexpected move to raise rates by 25 basis points

In an unexpected move, Norway's central bank increased its benchmark interest rate by 25 basis points to 4.50% in an effort to fight persistent inflation. The bank also stated that it would probably remain there for some time.

Fifteen of the twenty-seven analysts Reuters surveyed before of time predicted that rates would remain unchanged on Thursday, while the other twelve predicted a rise to 4.50%.

The central bank had stated last month that it expected to increase borrowing costs in December, but it added a disclaimer that a drop in core inflation might influence the decisions made by those in charge of monetary policy.

Norway’s annual core inflation, which does not include energy prices, peaked in June at 7.0%. In November, it was 5.8%, much over the 2.0% objective but less than the central bank’s prediction of 6.1%.

The central bank's predictions have been repeatedly out of line with the Norwegian crown, which might be fueling inflation. Up to Wednesday's market closing, the currency has lost around 9% of its trade-weighted value this year.

The next policy decision from Norges Bank is anticipated on January 25th.

(Sources: investing.com, reuters.com)