African Press International (API)

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Norway: Inflation rate jumps high

Posted by African Press International on April 13, 2007

Norway’s core inflation rate, which excludes changes in energy prices and taxes, rose to an annual rate of 1.5 percent in March. The rise came more quickly than expected.

The value of Norway’s currency rose along with the inflation rate and speculation of another interest rate hike.

PHOTO: TOR RICHARDSEN

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The country’s central bank, Norges Bank, has long targeted an annual inflation rate of around 2.5 percent. Even though Norway’s economy has been booming because of high oil prices, inflation has remained at record low levels.

That’s prompted the central bank to steadily raise interest rates over the past year, in the hopes of cooling down consumer demand. Now there’s speculation that rates will be boosted yet again in April, this time because inflation is rising.

Official figures released Tuesday showed Norway’s core consumer price index rising from an annual rate of 1.1 percent in February to 1.5 percent. The rise exceeded all forecasts by a panel of eight economists polled by news bureau Reuters.

“Overall it was stronger than expected, and it of course raises the question of whether we will have an interest rate hike already at the (central bank’s) April meeting,” the senior economist for Nordea Markets, Erik Bruce, told Reuters.

The central bank itself had predicted a 1.1 percent rise in its March inflation report.

The inflation hike boosted the value of Norway’s currency, the krone, against the euro. It had cost NOK 8.16 to buy one euro, but by mid-morning Tuesday it cost NOK 8.10.

By Nina Berglund

Lifted and published by African Press in Norway, apn, africanpress@chello.no tel +47 932 99 739 or +47 6300 2525 source.aftenposteneng.

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