Norges Bank's Executive Board has decided to raise the key policy rate by 0.25 percentage point to 0.75 percent. The upturn in the Norwegian economy continues. Spare capacity is gradually diminishing, and capacity utilisation now appears to be close to a normal level. Underlying inflation is close to the 2 percent inflation target. Overall, the outlook and the balance of risks imply a gradual interest rate increase in the years ahead. If the key policy rate is kept at the current level for too long, price and wage inflation may accelerate and financial imbalances build up further.