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The Norges Bank said on Thursday that the Norges Bank may raise interest rates in September, a move that will make it the first major Western country to raise official borrowing costs after the Covid-19 pandemic.
Norges Bank maintained its benchmark interest rate at 0% on Thursday, but governor Oystein Olsen Say “Policy interest rates are most likely to be raised in September” and hinted that there will be a second rate hike in December.
The announcement was made the day after the Fed said it raised interest rates for the first time Will come in 2023; Some economists expect that other central banks will only start tightening policies after this.Central Bank of Canada Start to scale down It buys bonds every month in April, making it the first major central bank to start reducing pandemic-related stimulus measures.
With the relaxation of the new crown virus restrictions and the increase in vaccination rates, the Norwegian economy is rebounding rapidly.A doctor leading the response to the coronavirus recently said The epidemic is “over” In Scandinavian countries.
The central bank stated that further reopening of Norwegian society in the next few weeks will “help restore more normal economic conditions” and therefore interest rate hikes will be appropriate. It added that this will also help reduce the risk of increased financial imbalances, especially in the real estate market.
When Norges Bank announced its latest policy decision on Thursday, it pointed out that the Norwegian economy is recovering from Covid faster than expected, and the underlying inflation rate has slowed and is below its 2% target.
It stated that moderate wage growth and a strong krona should curb inflation, adding: “As long as capacity utilization is rising, the risk of inflation becoming too low is limited.”
Economists at Nordea, a pan-European bank, said that the central bank’s forecast of the future interest rate path indicated that it plans to raise interest rates at every monetary policy meeting before next summer. The interest rate is expected to reach 1% by the end of 2022.
Norway’s output last year experienced the biggest contraction since World War II, but its gross domestic product fell by 2.5%, one of the countries with the smallest decline in Europe, much lower than Britain, France, Italy and Spain.Norwegian Bank Lower interest rates It fell by 1.5 percentage points in two months last year to cope with the contraction.
Norway is the largest oil producer in Western Europe Stand out economically for a long time Because its 1.3 trillion euro oil fund-the world’s largest sovereign wealth fund-helps cushion the economy during economic downturns.
The center-right government is planning This year it will spend the fund’s record revenue-403 billion Norwegian kroner (US$47 billion), equivalent to a quarter of the government budget-because it is preparing for the September national election, and it is seriously behind in the general election In the opinion poll of the center-left opposition.
Olson has caveat The government controls its reliance on spending funds from the oil fund and warns that if it continues, it may run out of funds.
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