Norway Central Bank Hikes Interest Rates

The Central Bank of Norway will increase interest rates by a quarter of a percentage point for the sixth time since May in a bid to cool off Norway's oil-fired economy, the bank said Thursday.

The bank said its new rate, which goes into force Friday, will be 4.0% on key deposits. The state central bank hiked rates from 2.0% in May 2006, for the first time in three years, and again in August, November, December and January.

"Growth in the Norwegian economy is strong and the high level of activity may hold up somewhat longer than expected," the bank said in a statement. "Employment is rising faster than projected and unemployment has declined to a low level."

Norway is going through an economic boom, due mainly to high prices for the oil that makes it the world's third-largest oil exporter, after Saudi Arabia and Russia. The bank said seasonally adjusted unemployment was 2.1% in February, while the annual inflation rate was 0.8%.

The central bank seeks to use interest rates to keep inflation at about 2.5% over two-year periods.

"The interest rate will be increased gradually so that we can assess the effects of interest rate changes and other new information on economic developments," the bank said.