Norway must prevent high inflation from becoming entrenched chief

Norway's central bank (Norges Bank) Governor Ida Wolden Bache looks on, following a news conference at the bank's headquarters in Oslo, Norway June 23, 2022. REUTERS/Victoria Klesty

ARENDAL, Norway, Aug 18 (Reuters) - Norway's central bank is now raising rates more quickly than it had planned in June in order to avoid a longer period of high inflation, Norges Bank Governor Ida Wolden Bache said on Thursday.

The central bank earlier raised its benchmark interest rate by 50 basis points (bps), twice the amount flagged in June, lifting it to 1.75%, the highest level in a decade.

"We could have decided to raise the policy rate more gradually. But then we would have run the risk of inflation becoming entrenched at a high level," Bache said in a speech.

"That would have made it more difficult to bring inflation down and could have required a sharper tightening of monetary policy somewhat further out, increasing the risk of an economic downturn," she said.

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Reporting by Victoria Klesty, writing by Terje Solsvik

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