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Updated September 24th, 2021 at 17:19 IST

Norway raises interest rates by 0.25%; first western country to do during COVID pandemic

The Central Bank of Norway, Norges Bank, after almost a year on Thursday, September 23 increased the policy rate from zero to 0.25 per cent.

Reported by: Apoorva Kaul
Norway
Image: Shutterstock | Image:self
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Norway's Norges Bank announced the decision to hike the interest rate by 0.25%, the first western country to do so since the start of COVID-19 pandemic. The bank, on Thursday, September 23 increased the policy rate from zero to 0.25%. The Central Bank of Norway has raised the interest rates after almost a year. The bank said in its statement that the decision to raise the interest rate has been taken with regards to the economic activity that was above the pre-pandemic level. The bank took to Twitter to announce the decision to increase the policy rate. 

Norges Bank raises policy rate from zero to 0.25 per cent 

Norges Bank slashed the interest rates by 1.5% in May 2020, reported Sputnik News. However, the Norwegian Bank has increased the policy rate from zero to 0.25%. Norges Bank Governor Oystein Olsen, in a statement, noted that the normalising economy suggested it was the right time to raise the policy rate.

Olsen, in the statement, said, "A normalising economy now suggests that it is appropriate to begin a gradual normalisation of the policy rate". The bank noted that the gradual reopening of society has given a boost to the Norwegian economy, with activity higher than pre-pandemic levels.

The Norwegian Central Bank stated that unemployment has fallen further and the interest is now higher than its pre-pandemic level. The bank suggested that the economic upturn will likely continue through autumn. The bank hinted that another rise was likely in December.

Governor Oystein Olsen in the statement said, "Based on the Committee's current assessment of the outlook and balance of risks, the policy rate will most likely be raised further in December". The Central Bank of Norway warned of the emergence of new COVID-19 strains and how they could affect the economy.

Reportedly, several other countries including South Korea and Brazil have raised their interest rate, reported Sputnik News. However, western central banks have been divided over increasing interest rates. The US Federal Reserve and the Bank of England had earlier indicated about raising the interest rates. Meanwhile, Sweden's Central Bank has reportedly decided that the zero-level interest rate would remain in place at least until 2024. 

Image: Shutterstock

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Published September 24th, 2021 at 17:19 IST

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