Norges Bank Leaves Rates Steady as Expected

The Norges Bank left its policy rate unchanged at 4% at its first meeting of 2026, as widely expected. While acknowledging elevated uncertainty, the bank said rates could be lowered later in the year if the economy evolves as projected. Policymakers stressed that a restrictive monetary stance is still warranted, as inflation remains above target. They cautioned that easing policy too quickly could allow inflation to stay elevated for an extended period. At the same time, the bank warned that maintaining an overly tight stance for too long could weigh unnecessarily on economic activity and restrain growth more than required to bring inflation back to target. The Norges Bank reaffirmed its December rate forecast, which points to one to two rate cuts in 2026, despite heightened geopolitical uncertainty. However, officials emphasized that policy remains data-dependent and that both rate cuts and hikes remain possible, depending on how the economy and inflation evolve.

The Norges Bank left its key policy rate unchanged at 4% for a second straight meeting in December 2025, as widely expected, and indicated it is not in a hurry to lower rates. The bank emphasized that a restrictive monetary policy remains necessary, with inflation still above target and underlying inflation hovering close to 3% for some time, while the weaker krone contributes to raising inflation prospects. Policymakers also noted that the tightening cycle has helped cool the Norwegian economy and dampen inflation in recent years. While the outlook remains uncertain, the bank reiterated that if the economy evolves broadly as expected, the policy rate is likely to be reduced further over the coming year. Rate projections are little changed from the September report, pointing to 1-2 cuts in 2026 and a gradual decline to somewhat above 3% by late 2028.

The Norges Bank kept its key policy rate unchanged at 4% in November 2025, following a 25 basis-point cut at the previous meeting, in line with market expectations. Policymakers noted that no new information has emerged to materially alter the outlook for the Norwegian economy since the last monetary policy meeting in September. While acknowledging that the outlook remains uncertain, the bank reiterated that if the economy develops broadly as projected, the policy rate is likely to be reduced further over the coming year. The central bank also emphasized that monetary policy has helped cool the Norwegian economy and curb inflation in recent years. However, inflation remains above target, with core inflation hovering around 3%, and unemployment edging slightly higher. Policymakers stressed that a restrictive stance is still warranted, as the task of bringing inflation fully under control is not yet complete, and the bank is in no rush to lower rates further.