Norges Bank Holds at 4%

Norges Bank Maintains Policy Rate at 4 Percent, Citing Need to Complete Inflation Fight

Norges Bank’s Monetary Policy and Financial Stability Committee decided to keep the policy rate unchanged at 4 percent at its meeting on November 5. This decision was based on the Committee’s assessment that no new information has come in that indicates a material change to the outlook for the Norwegian economy since the monetary policy meeting in September. The press release detailing this decision was published on November 6, 2025.

Current Stance and Economic Assessment

The Committee judges that a restrictive monetary policy is still needed. While monetary policy has contributed to cooling down the Norwegian economy and dampening inflation in recent years, inflation is still above target. Underlying inflation has been close to 3 percent for some time.

However, the sources indicate that the economy has responded to previous policy tightening: unemployment has increased somewhat, and capacity utilisation in the economy has declined to a normal level. Before summer, the Committee began a cautious normalization of monetary policy, having already reduced the policy rate twice, bringing it from 4.5 percent to the current 4 percent.

Governor Ida Wolden Bache stated that the Committee is “not in a hurry to reduce the policy rate,” emphasizing that “The job of tackling inflation has not been fully completed”. The Committee concluded that it is appropriate to keep the policy rate unchanged at the current meeting, cautioning that lowering the rate too quickly could allow inflation to remain above target for too long. Conversely, maintaining an overly tight stance could restrain the economy more than necessary.

Future Outlook and Policy Path

The outlook remains uncertain, but the Committee holds that if the economy evolves broadly as currently envisaged, the policy rate will be reduced further in the course of the coming year. The forecast presented in September was consistent with one rate cut per year in the coming three years.

The future path of the policy rate is contingent upon economic developments. The sources outline two main conditional adjustments:

1. Higher Rate Scenario: If the outlook suggests that inflation will remain elevated for longer than projected, a higher policy rate than envisaged in September may be required.

2. Faster Rate Cut Scenario: If the outlook indicates that inflation will return to target faster than projected, or if labor market conditions weaken more than expected, the policy rate may be lowered faster.

Next Steps

The Committee did not prepare new forecasts for this meeting. More information about economic developments will be received ahead of its next monetary policy meeting in December, at which point new forecasts will be presented. Monetary Policy Report 4/25 will be published along with the policy decision on 18 December 2025.