“The job of tackling inflation has not been fully completed, and we are not in a hurry to reduce the policy rate”, says Governor Ida Wolden Bache.

Monetary policy has contributed to cooling down the Norwegian economy and to dampening inflation in recent years. Inflation is still above target, and underlying inflation has been close to 3 percent for some time. At the same time, unemployment has increased somewhat, and capacity utilisation in the economy has declined to a normal level. The Committee began a cautious normalisation of monetary policy before summer, and the policy rate has been reduced twice, from 4.5 percent to 4 percent.

The Committee judges that a restrictive monetary policy is still needed. Inflation is still too high. If the policy rate is lowered too quickly, inflation could remain above target for too long. On the other hand, an overly tight monetary policy stance could restrain the economy more than needed to bring inflation down to target. The policy rate forecast presented in September was consistent with one rate cut per year in the coming three years. The Committee's assessment is that no new information has come in that indicates a material change to the outlook for the Norwegian economy. The Committee judges that it is appropriate to keep the policy rate unchanged at this meeting.

“If the economy evolves broadly as currently envisaged, the policy rate will be reduced further in the course of the coming year”, says Governor Ida Wolden Bache.

The future path of the policy rate will depend on economic developments. If the outlook indicates that inflation will remain elevated for longer than projected, a higher policy rate than envisaged in September may be required. If the outlook indicates that inflation will return to target faster than projected or labour market conditions weaken more than expected, the policy rate may be lowered faster.

The Committee will have received more information about economic developments ahead of its next monetary policy meeting in December, when new forecasts will be presented.

New forecasts were not prepared for this meeting. Monetary Policy Report 4/25 will be published along with the monetary policy decision on 18 December 2025.