Foreign Banks Beginning to Raise Rates

• Following Australia's example from earlier this month, Norway follows and raises it's overnight lending rate by 0.25%. Mark Carney of the Bank of Canada has 'commited' to maintaining Canada's overnight lending rate at 0.25%, although many are skeptical that this will indeed be raised before the previously set date of end of second quarter, 2010. Read below for more information on what other countries are currently experiencing~

Leah

Norway becomes 1st in Europe to raise rates

28/10/2009 10:53:41 AM

CBC News
Norway's central bank has decided to raise its key interest rate by a quarter percentage point to 1.5 per cent, making the oil-rich country the first European economy to boost rates since the height of the global financial crisis.

Norges Bank announced the hike Wednesday, citing "signs of new growth" in the economy.

On Tuesday, the central bank of India elected to hold rates steady, but gave a strong indication it plans to hike rates in the near future due to runaway inflation - expected to reach 6.5 per cent by March, well ahead of the three per cent target.

In August, the Israeli central bank boosted its benchmark lending rate.

And earlier this month, Australia became the first major world economy to raise its lending rate. Australia is one of the few developed economies in the world to have avoided a recession.

Since October 2008, Norway's central bank has cut rates by a total of 4.5 percentage points due to the financial and economic crunch, but rates have held steady since June.

The Nordic country of 4.8 million, which is not a member of the European Union, escaped the financial crisis largely unscathed thanks to its vast oil revenues, which it invests in a sovereign wealth fund worth $420 billion US.

Still, Norway's economy is predicted to shrink one per cent this year.

In its latest policy decision last week, the Bank of Canada held its benchmark lending rate steady at 0.25 per cent. It reiterated its "conditional commitment" to keep rates there until late 2010 at least.

With files from The Associated Press