Norges Bank Raises Policy Rate to 4.5% as Inflation Stays High
Consumer prices rose 3.3% in the year through August, while CPI adjusted for tax changes and excluding energy products increased 3.0%, both above Norway’s 2% target.
Norges Bank raised its policy rate to 4.5% from 4.25% as inflation remained above target, signaling that the policy rate may stay elevated while price pressures persist.
The increase followed the central bank’s Sept. 23 monetary-policy meeting and took effect Sept. 25. Norges Bank said a somewhat tighter policy stance is needed to return inflation to its 2% target within a reasonable time.
Consumer prices rose 3.3% in the 12 months through August. CPI adjusted for tax changes and excluding energy products increased 3.0% over the same period, leaving both measures above the central bank’s 2% target.
“Inflation has been above target for several years. By raising the policy rate, we are helping to reduce inflation,” Governor Ida Wolden Bache said.
Underlying price pressures moderated over the summer, but the broader inflation outlook did not materially improve. Higher oil, gas and other commodity prices, rising labor costs and expectations for tighter monetary policy abroad could keep inflation elevated.
A stronger Norwegian krone could ease inflation by reducing import costs. Registered unemployment stood at 2.1% of the labor force in August.
“It will likely be necessary to keep the policy rate elevated for a time,” Bache said. Norges Bank projects inflation will decline to 2% in 2029 and expects registered unemployment to rise slightly above pre-pandemic levels as economic activity cools.
The central bank’s policy rate influences borrowing costs, demand and inflation across the Norwegian economy. Its latest decision keeps monetary conditions restrictive while officials assess whether price growth is moving back toward target.
Norges Bank is scheduled to announce its next policy-rate decision on Nov. 5, 2026.
