Norway central bank hikes rate, citing Mideast war
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Norway's central bank on Thursday hiked its guiding rate by 0.25 percentage points to 4.25 percent, citing a risk that the war in the Middle East could worsen already elevated inflation.
"Inflation is too high and has run above target for several years," Norges Bank governor Ida Wolden Bache said in a statement.
In March, underlying inflation, the indicator preferred by Norway's central bank, stood at 3.0 percent, well above the official monetary policy target of inflation around two percent.
The central bank also noted that "there is substantial uncertainty about future economic developments."
"The increase in oil and gas prices due to the war in the Middle East could push up inflation further," it said.
Oil prices worldwide have surged since the United States and ‘Israel’ launched strikes against Iran on February 28, leading to a blockade of the Strait of Hormuz.
Hopes for a peace deal have since driven prices back down, with Brent crude slipping below the $100 mark.
In neighbouring Sweden, the Riksbank on Thursday said it was leaving its key rate unchanged at 1.75 percent, with the central bank noting that there was "scope to wait until there is a clearer picture of the effects of the war and the supply shocks it entails."
