Norges Bank chief says interest rates must rise despite imported price pressures

Following a recent increase in inflation, Norges Bank raised its policy rate and its governor, Ida Wolden Bache, affirmed that the bank will continue to tighten monetary policy even when the underlying price drivers are external. Bache explained that heightened international price impulses—from higher oil, gas, refined products and certain agricultural commodities—are partly caused by wars in the Middle East and Ukraine as well as hot, dry weather in other regions.

She argued that, although the bank cannot influence those foreign price sources, it can mitigate their ripple effects on the Norwegian economy. Some critics, including LO economist Roger Bjørnstad, suggest a less aggressive stance, but Bache contends that the bank must act whenever inflationary expectations rise, regardless of origin. She also warned that future rate hikes may be needed to steer inflation back toward the target, and that borrowers should expect rates to stay above pre-pandemic levels for some time.