(Bloomberg) -- Norges Bank raised borrowing costs to the highest level in more than 14 years and told investors to expect one more move, adding constriction to an already cooling economy. 

The central bank lifted its key deposit rate on Thursday by 25 basis points to 4.25%, the highest level since 2008. The outcome was forecast by all analysts in a Bloomberg survey. 

The bank raised its outlook for the key rate to indicate a level of around 4.5% — a quarter point higher than most economists expected ahead of the meeting — through 2024. 

“There will likely be one additional policy rate hike, most probably in December,” said Governor Ida Wolden Bache. “There will likely be a need to maintain a tight stance for some time ahead.” 

The prospect of another move and then a pause in Norway would align the country with advanced-economy peers. On the eve of the Norges Bank decision, Federal Reserve Chair Jerome Powell said that the US central bank will now “proceed carefully” — though rates will stay higher for longer and a further hike may materialize. 

In Norway, the fossil-fuel-rich economy is slowing after having defied the fallout from higher prices and rising credit costs for most of this year. 

“We’re trying to balance the risks of tightening too little against tightening too much,” Deputy Governor Pal Longva said in an interview in Oslo. “So it’s clear we could get an unnecessarily sudden brake in the Norwegian economy, with considerable costs for businesses and others, and we wish to avoid that.”

The central bank made only small revisions in forecasts for key economic indicators, while raising its projection for next year’s wage growth to 5.2% from 4.7%.

“The projection of the real policy rate has been raised by roughly 0.3 percentage points over the coming years, signalling a clear need for an even more restrictive monetary policy stance,” said Kjetil Martinsen, Swedbank AB’s chief economist for Norway, who had forecast previously forecast rate peak at 4.5%.

“Norges Bank sees only gradual rate cuts from the fourth quarter of 2024 onwards,” he said. “We see more value in betting on more cuts needed from late 2024 and further out.”

A strengthening in the krone during the past couple of months from its previously low level has helped to ease policymakers’ worries over imported inflation, with underlying price growth slowing more than forecast last month.

Norges Bank was the first in the G-10 group of major currency jurisdictions to start raising rates in September 2021. 

The krone, helped by a higher oil price, has this quarter recouped some of its earlier losses attributed in part to slower rate hikes versus the European Central Bank and the Fed.

The move follows a similar-sized rate hike by the Riksbank in neighboring Sweden earlier on Thursday, where officials kept the door open to a further move though avoided signaling that another increase is certain. The Swiss National Bank unexpectedly kept borrowing costs on hold, with a similar decision by the Bank of England. 

Read More: Riksbank Hikes Swedish Rate With Door Kept Open to Act Again

--With assistance from Thomas Hall and Joel Rinneby.

(Updates with comments from deputy governor, analyst from seventh paragraph.)

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