Norway central bank raises rate to 3% as expected, says May hike likely

Norway's central bank raised its key policy rate by 25 basis points (bps) to 3.0% on Thursday, as expected by almost all economists surveyed by Reuters, and said it aimed for another hike in May and raise it further to hit 3.5% in summer.

Of the 26 economists polled in advance, 25 had anticipated an increase of 25 bps on Thursday while one had bet on an increase of 50 bps. "There is considerable uncertainty about future economic developments, but if developments turn out as we now expect, the policy rate will be raised further in May," Norges Bank Governor Ida Wolden Bache said in a statement.

"The policy rate forecast has been revised up from the December Monetary Policy Report and indicates a rise in the policy rate to around 3.5 percent in summer," Norges bank said. The Norwegian currency, the crown, briefly rallied to 11.25 against the euro at 0901 GMT but later eased back to trade at 11.29.