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Norges Bank raised Norway’s policy rate by 0.25 percentage point to 4.5 percent on 24 September 2026. Governor Ida Wolden Bache said inflation, at 3.3 percent, remains well above the 2 percent target and that the rate will likely stay elevated for some time, with further hikes possible.
Norges Bank raised Norway’s policy rate by 0.25 percentage point to 4.5 percent on 24 September 2026, as consumer price inflation of 3.3 percent continues to run well above the bank’s 2 percent target. Governor Ida Wolden Bache said the Committee is prepared to raise the rate further if needed, and that borrowing costs will likely remain elevated for a period before declining.
The decision was taken by Norges Bank’s Monetary Policy and Financial Stability Committee and announced at a press conference in Oslo. The central bank’s mandate is to keep inflation close to 2 percent over time, while also supporting high employment and economic stability. According to figures released earlier in September, headline consumer price inflation stood at 3.3 percent; adjusted for tax changes and excluding energy products, underlying inflation was 3.0 percent.
The Governor said the background to the decision was an inflation picture that, while moderating at the margin, remains inconsistent with target. Underlying inflation moderated over the summer and came in lower than expected, but the outlook somewhat further ahead “does not appear to have changed materially,” she said. The sharp rise in firms’ labour costs in recent years is expected to keep inflation elevated, and oil, gas and other commodity prices have risen since the June projections, pushing up costs for domestic firms and prices of imported consumer goods.
One offsetting factor is the krone, which has appreciated this year and is now stronger than the bank assumed in June — a development that in isolation pulls inflation down. Internationally, US and euro area policy rates were raised in recent weeks and more hikes are expected abroad, and higher rates abroad push toward higher rates in Norway, partly through the exchange rate, according to the Governor. The new rate forecast keeps the policy rate close to its current level for a period before declining, implying an elevated rate for somewhat longer than the June forecast indicated.
Impact on Norwegian Borrowers and Prices
The hike directly raises short-term borrowing costs for Norwegian households and businesses, and signals that relief from high rates is further away than previously projected. For households, Norges Bank projects that household purchasing power will continue to strengthen as inflation falls, even after factoring in interest expenses. Wage growth is expected to be lower this year than in 2025 and to slow further ahead, while unemployment is projected to edge up to slightly above pre-pandemic levels as the economy cools.
The decision also matters because it shows the bank is willing to tighten further into a cooling economy to protect its inflation target. The Governor cautioned that high inflation over time can make it stickier and harder to bring down — the stated rationale for acting now despite unemployment having changed little over the past year. Registered unemployment was 2.1 percent of the labour force in August, in line with the bank’s projection, and Regional Network contacts report it has become easier to recruit labour.
From June Projections to September Hike
When Norges Bank presented its projections in June, the Committee judged it would likely be necessary to raise the policy rate at one of the forthcoming meetings — a signal that preceded Thursday’s decision. Since then, underlying inflation came in lower than expected, but rising energy and commodity prices linked to the ongoing conflict in the Middle East, higher market rates and tighter policy in the US and euro area shifted the balance toward a longer period of restriction.
The bank’s new projection, presented alongside the decision, has inflation slowing from next year and reaching 2 percent in 2029. The path implies the bank accepts a slower return to target than many peers, in exchange for what it projects as a return to target without a marked increase in unemployment.
“The Monetary Policy and Financial Stability Committee has decided to raise the policy rate by 0.25 percentage point to 4.5 percent.”
— Ida Wolden Bache, Governor of Norges Bank
Open Questions in the Inflation Outlook
Several elements of the outlook are explicitly uncertain. The Governor said the economic outlook is uncertain and hence also interest rate developments. The conflict in the Middle East continues to create uncertainty about inflation, and the effect of rising oil, gas and commodity prices on domestic costs and imported goods is difficult to gauge.
It is not yet clear whether further rate hikes will be needed, or precisely when the projected decline in the policy rate will begin. The strength of the krone, wage growth, and the pace of tightening abroad — particularly in the US and euro area — could all shift the path. The bank’s forecast of inflation reaching 2 percent in 2029 is a projection, not a guarantee.
Watching for Further Tightening
Norges Bank’s next scheduled policy meetings will show whether the Committee follows through on its willingness to raise the rate again. Key inputs will include monthly CPI releases, wage data, krone exchange rate movements, and the pace of rate hikes by the Federal Reserve and the European Central Bank. If underlying inflation continues to moderate as it did over the summer, the bank may hold at 4.5 percent for an extended period; if energy and commodity price increases feed through more strongly, another hike is possible. The bank will also update its projections, which currently show the rate staying near current levels before easing, and inflation reaching target in 2029.
Key Questions
What did Norges Bank announce on 24 September 2026?
The Monetary Policy and Financial Stability Committee raised the policy rate by 0.25 percentage point to 4.5 percent, citing inflation of 3.3 percent against the 2 percent target, and said it is prepared to hike again if needed.
Why is the rate being raised?
According to Governor Ida Wolden Bache, inflation has been above target for several years, and sustained high inflation can become stickier and harder to bring down. Rising labour costs and higher oil, gas and commodity prices are expected to keep inflation elevated.
When will interest rates come down?
The bank’s forecast shows the policy rate staying close to the current level for a period before declining — somewhat longer than indicated in June. No specific date was given. The Governor stressed the outlook is uncertain.
What does this mean for jobs and wages?
The bank projects the economy will cool somewhat further, with unemployment edging up to slightly above pre-pandemic levels. Unemployment was 2.1 percent in August. Wage growth is expected to be lower this year than in 2025 and to slow further ahead.
How does foreign monetary policy affect Norway’s decision?
Higher interest rates abroad, including recent US and euro area hikes, pull toward higher rates in Norway, partly through the effect on the krone exchange rate, according to the Governor.
Source: primary
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