Central banks: Norway is the first G10 country to raise rates

Chart of the week

Norway’s central bank raised its benchmark interest rate by 0.25% at its recent meeting. After having lowered its policy rate from 1.50% down to 0.00% at the beginning of 2020, this increase brings an end to almost eighteen months of zero interest-rate policy. The Norges Bank is following in the footsteps of several emerging market central banks that have already raised policy rates and is considering additional increases in the months ahead.


Last week saw various G10 central banks hold their monetary policy meetings and a change became apparent. Fed Chair Jerome Powell confirmed that tapering will begin soon and could be completed by mid-2022. The FOMC members’ rate forecasts have also edged slightly higher. Similarly, the Bank of England’s messaging has led to consensus expectations of a rate increase during the first quarter of 2022. As for the ECB, while rhetoric was dovish, leaks over its internal long-term projections that inflation would reach its 2.0% target in 2025 put pressure on rates.

While the current shift in central bank policy stance is of a gradual nature, it may sharpen if inflation readings remain stubbornly high.


See also: https://latribune.lazardfreresgestion.fr/en/united-states-a-deceptive-slowdown-in-inflation/

The following opinion was written on September 30, 2021 and is susceptible of changing.

Sources : Bloomberg, and calculation from Lazard Frères Gestion

As of : September 30, 2021

This document is not pre-contractual or contractual in nature. It is provided for information purposes. The analyses and descriptions contained in this document shall not be interpreted as being advice or recommendations on the part of Lazard Frères Gestion SAS. This document does not constitute an offer or invitation to purchase or sell, nor an encouragement to invest. This document is the intellectual property of Lazard Frères Gestion SAS. LAZARD FRERES GESTION – a simplified joint stock company with share capital of €14,487,500 – Paris Trade and Companies Registry No. 352 213 599. 25, RUE DE COURCELLES – 75008 PARIS, FRANCE