Norway central bank makes largest rate hike in 20 years

"Based on the committee's current assessment of the outlook and balance of risks, the policy rate will most likely be raised further to 1.5 percent in August," Governor Ida Wolden Bache said in a statement. Of the 20 economists polled by Reuters in advance of Thursday's announcement, 14 had predicted Norges Bank would hike by 25 basis points while six said a 50 point increase to 1.25% was the most likely outcome.

Norway's central bank raised its benchmark interest rate by 50 basis points on Thursday, the largest single hike since 2002 and twice as much as expected by most economists, and plans to hike again in August as the country seeks to control inflation.

Norges Bank's monetary policy committee raised the sight deposit rate to 1.25% from 0.75%, exceeding its own forecast made in March of a hike to 1.0%. "Based on the committee's current assessment of the outlook and balance of risks, the policy rate will most likely be raised further to 1.5 percent in August," Governor Ida Wolden Bache said in a statement.

Of the 20 economists polled by Reuters in advance of Thursday's announcement, 14 had predicted Norges Bank would hike by 25 basis points while six said a 50 point increase to 1.25% was the most likely outcome. The Norwegian currency, the crown, firmed to 10.47 against the euro at 0805 GMT from 10.51 just before Norges Bank's announcement.