Norway’s central bank governor Ida Wolden Bache acknowledged on Tuesday that the public dislikes the high interest rates but insisted they are sometimes necessary. She spoke ahead of a widely expected rate decision later this week.
Bache’s remarks came as financial markets brace for another increase in borrowing costs. The Norges Bank has raised rates repeatedly in recent months to curb inflation, which remains above the bank’s target. While the policy aims to stabilize prices, it also burdens households with higher loan costs.
She emphasized that the bank must act to prevent inflation from becoming entrenched. "We know the rate hike is unpopular," Bache said. "But our duty is to ensure price stability over time."
Critics argue the bank is acting too aggressively. Some economists warn further hikes could push the economy into recession. Others support the tightening, citing persistent inflation risks.
The bank’s next rate announcement is scheduled for Thursday. Analysts expect a quarter-point increase, though some predict a larger move if inflation data surprises on the upside.
Source: e24.no