Norway’s central bank raised its key interest rate on Thursday, as it follows a clutch of countries tightening stimulus measures rolled out during the pandemic.

The widely-expected announcement makes Norway the first of the G10 currencies group – 10 of the world’s most traded currencies – to tighten its monetary policy since the outbreak of the pandemic.

The widely-expected announcement makes Norway the first of the G10 currencies group – 10 of the world’s most traded currencies – to tighten its monetary policy since the outbreak of the pandemic

Central banks in Brazil, Russia, Mexico, South Korea, the Czech Republic and Iceland have already raised their interest rates this year.

But the US Federal Reserve and European Central Bank have maintained their ultra-low rates and massive asset-buying programmes so far.

Norway’s central bank raised its key interest rate by a quarter point to 0.25 per cent on Thursday and suggested more hikes were coming.

“A normalising economy now suggests that it is appropriate to begin a gradual normalisation of the policy rate,” central bank governor Oystein Olsen said at a press conference.

The Scandinavian country has been relatively spared throughout the COVID-19 crisis, and its economy has already returned to pre-pandemic levels.

The central bank raised its growth outlook for this year a pinch, by 0.1 point to 3.9 per cent, and by 0.4 points to 4.5 per cent for 2022. It also raised its rate forecast path, saying there would probably be a gradual increase in rates in the coming years, with a hike in December “most likely”.

Research group Capital Economics said the bank’s “messaging was perhaps a bit more hawkish than we had anticipated”, citing its prediction that increased activity and rising wage growth would help push inflation up toward the inflation target of two per cent.

“We now expect the bank to raise rates once per quarter next year”, which “would take the rate back to the pre-pandemic level of 1.50 per cent by the end of 2022,” Capital Economics said.