The policy rate is the interest rate paid to banks on their deposits with Norges Bank. This rate affects the interest rates banks offer each other and other customers, such as the rates on residential mortgages and savings accounts.

Interest rates are the price of money. The policy rate is particularly important as it affects the price of money throughout the economy. Changes to the policy rate normally lead to changes to other interest rates, such as the interest rates on bank loans and savings.

When the price of money rises, it becomes less attractive to borrow and more attractive to save. This slows the flow of money into the economy and reduces inflation and economic activity.

When the price of money falls, it becomes more attractive to borrow and less attractive to save. This increases the flow of money into the economy and boosts economic growth and inflation.

Normally, Norges Bank sets the policy rate eight times a year. Norges Bank’s Monetary Policy and Financial Stability Committee sets the policy rate. Information about all policy rate decisions made by Norges Bank can be found here.

Norges Bank sets the policy rate to achieve the objectives defined by the political authorities:

The policy rate primarily contributes to maintaining a stable value of the Norwegian krone through ensuring a low and stable rise in prices, also called inflation. The target is inflation of close to 2 percent per year. Norges Bank is also tasked with keeping employment as high as possible and promoting economic stability.

Sometimes, the objectives pull the policy rate in the same direction, but at other times, Norges Bank will have to make trade-offs between different objectives. Norges Bank's Monetary Policy and Financial Stability Committee sets the policy rate. In connection with all policy rate decisions, the Committee publishes a text, called Monetary Policy Assessment, describing the Committee's assessments and trade-offs.