OSLO, Nov 3 (Reuters) – Norway’s central bank on Thursday raised its benchmark interest rate by 25 basis points to 2.50%, in line with its own projections, but less than economists had expected of a Reuters poll, which weakened the currency of the krone.

Norges Bank, which had opted for 50 basis point hikes in previous rate meetings, said it would likely raise borrowing costs again in December to tackle inflation which is currently at more than 5%, well over double its target rate.

“We are raising the policy rate to curb inflation,” Governor Ida Wolden Bache said in a statement.

Of 25 analysts polled by Reuters ahead of the policy meeting, 12 had predicted a 25 basis point rise, in line with Norges Bank’s own September projection, while 12 others had bet on a 50 basis point rise. An economist predicted a rise of 75 basis points.

“Based on the current assessment by the Outlook and Balance of Risks Committee, the policy rate will most likely be raised further in December,” the bank said in a statement.

“The outlook is more uncertain than normal. The future path of policy rates will depend on how the economy develops.”

Norway‘s currency, the krone, fell to 10.33 against the euro at 0952 GMT from 10.28 just before the rate announcement.

The 25 basis point rise meant Norges Bank was sticking to its plan, Nordea Markets said.

“A 25 basis point hike in December is also the most likely outcome. That said, we cannot completely rule out the likelihood of a 50 basis point hike,” its analysts said in a note to clients.

“If unemployment continues to remain at very low levels, core inflation continues to surprise on the upside and the krone weakens significantly, Norges Bank may feel the need to act more forcefully in december.”

The U.S. Federal Reserve hiked rates by 75 basis points on Wednesday and said its fight against inflation would require a further increase in borrowing costs, while signaling that its tightening campaign could approach one point. inflection.

Norway’s September core inflation rose to 5.3% year-on-year, above analysts’ average forecast of 4.9%, driven by a 12.1% rise in the cost of food and drinks.

The central bank is targeting underlying inflation of 2.0% over time.

Reporting by Victoria Klesty and Gwladys Fouche, editing by Terje Solsvik and Catherine Evans

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