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Norway’s central bank president believes rates will increase despite difficult trade-offs.

OSLO, Norway (Reuters) – In the next few months, Norway’s interest rates are likely to rise because of strong domestic growth and a buildup of pressure on the economy. The country’s central bank governor said Thursday that the Ukraine crisis also adds uncertainty to the world picture.

Norges Bank Governor Ida Wolden Bache told a parliamentary committee that economic activity is robust in Norway, and the accumulation of pressures in the economy is expected to push inflation higher in the near future.

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As a result, the policy rate is increasing… However, projections remain questionable. If the economy does not develop as anticipated, the policy rate path may also shift, “she said.

As a consequence, she noted, Norway may face “more difficult monetary policy trade-offs in the future.”

However, “we have a clear purpose and will continue to work to achieve our mandate of maintaining low and stable inflation and contributing to economic stability in the years ahead,” Bache added.

Norges Bank said last month that it would increase interest rates more quickly than originally planned this year and next in order to contain inflation and support a rapidly developing economy.

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