Norway's tightening of monetary policy heralds a period of interest rate hikes

Stockholm, October 28 (Xinhua) Norway's central bank announced 28th that it would raise its overnight deposit rate by 25 basis points to 1.5% per cent, suggesting more interest rate hikes.　　Norway has thus become Europe's first country to enter the interest rate hike cycle, and the third to tighten monetary policy after Israel and Australia. "The unemployment rate is expected to remain low for the next few years and wages are growing faster than previously anticipated," the Norwegian central Bank said in a statement. That means higher inflation, so the rate hike will be faster than previously expected. "The Norwegian economy is out of recession in the second quarter of this year, driven by oil exports and government stimulus programs."　　In addition, Norway's unemployment rate remains low, with Norway registering a jobless rate of only 2.7% per cent, the lowest in European countries. The Norwegian central Bank has opted to tighten monetary policy largely out of worries about inflation. The Norwegian central Bank predicts that the underlying inflation rate this year will rise to 2.75% per cent, excluding energy and tax factors.　　The Norwegian central bank set its target inflation rate at 2.5%. However, analysts pointed out that Norway's situation in Europe is more special, because other European countries, the economic situation and unemployment is more severe than Norway, Norway is likely to become Europe's only recent monetary policy to turn the country.