Norway's central bank raised the benchmark interest rate to 5.5 percent, the highest since April 2003, on concern a slowdown in economic growth will fail to shackle inflation.
Norges Bank increased the deposit rate by a quarter point...
The bank's preferred measure of inflation, which excludes energy and taxes, slowed to 2.1 percent in March, above the central bank's forecast of 2 percent.
In contrast, Norway's neighbour Sweden isn't in any hurry to get any closer, at least as far as interest rates are concerned.
Sweden's Riksbank, left its repo rate unchanged at a six-year high of 4.25 percent today and reiterated it would leave borrowing costs unchanged until 2010 to bring inflation below the 2 percent target. Inflation accelerated to a five-year high of 2.3 percent in March.
For all its tough talk and inflationary data (see for example Macro Man's analysis), the European Central Bank is more likely to emulate the Riksbank for the time being, especially after the mixed economic reports yesterday. From Bloomberg:
Royal Bank of Scotland Group Plc said a preliminary estimate of its services index rose to 51.8 from 51.6 in March. Economists expected a decline to 51.4, according to the median of 38 forecasts in a Bloomberg News survey...
RBS's gauge of manufacturing activity fell more than economists forecast to 50.8 from March's 52. The composite index of services and manufacturing rose to 51.9 from 51.8.
Industrial orders held up well in February.
Euro-region industrial orders rose 0.6 percent in February from the previous month, boosted by aircraft and other transport equipment, the European Union's statistics office said today. Economists expected a 0.4 percent decline, according to the median of 17 forecasts in a Bloomberg survey. From a year earlier, orders grew 9.9 percent.
However, there are ominous signs. Again from Bloomberg:
Belgian business confidence fell by a record this month on concern the euro's gain against the dollar and soaring food and energy costs will curtail economic growth.
The business-confidence index, considered a leading indicator for Europe, fell to minus 7.9, the lowest since August 2005, from 1.2 in March, the nation's central bank said today in Brussels. The decline exceeded analysts' forecasts and was the biggest drop since the bank began the index in 1980.
Elsewhere, though, inflation remains a big concern.
Australia's inflation rate soared to a six-year high of 4.2 percent in the three months to March. That helped drive the Australian dollar yesterday to the highest level since 1984.
Inflation in Singapore rose to 6.7 percent last month, the highest rate in 26 years. The Singapore dollar also touched another record high yesterday. This is likely to be a routine from now on if the Monetary Authority of Singapore seriously hopes to fight inflation.
One central bank that surely has to treat inflation seriously is the South African Reserve Bank. Despite interest rates now at 11.5 percent, South African inflation accelerated to an annual rate of 10.1 percent in March, the highest in more than five years.