OSLO: Norway's central bank raised its key interest rate on Thursday and said it would continue to tighten its monetary policy due to the strength of the Scandinavian country's economy, in contrast to a slowdown in much of the rest of the world.
The key rate was hiked by 0.25 points for the second time in six months, rising to 1.0 percent, reports AFP."Our current assessment of the outlook and balance of risks suggests that the policy rate will most likely be increased further in the course of the next half-year," the bank's governor Oystein Olsen said in a statement.
The bank said that the "upturn in the Norwegian economy appears to be stronger than anticipated earlier".
Analyst David Oxley of Capital Economics said that the increase had been expected after policymakers signalled they would raise rates at their last meeting in January.
"However, the more hawkish stance adopted by the bank, saying that the next hike will 'most likely' be in the second half of 2019 has caught the market on its toes," he said.
"Having already risen strongly against the euro this year, the Norwegian kroner surged by one percent against the single currency after the decision."
Rising oil prices have propelled the economy of Norway, the biggest oil and gas producer in western Europe.