At the monetary policy meeting in March, the Committee’s assessment was that it would likely be appropriate to raise the policy rate at one of the forthcoming monetary policy meetings. Unexpectedly high inflation and higher wage growth prospects than previously assumed implied that inflation would become higher than the Committee had envisaged. The increase in oil and gas prices due to the war in the Middle East could push up inflation further. At the same time, the Committee placed emphasis on the fact that it was difficult to assess underlying inflation pressures, and that the uncertainty surrounding oil and gas prices was unusually elevated. The Committee therefore wanted to await further information on the prospects for inflation.

“The Committee judged it appropriate to raise the policy rate at this meeting. Inflation is too high and has run above target for several years. The information on the inflation outlook we have received in recent weeks supports the analyses we presented in March”, says Governor Ida Wolden Bache.

Since the March monetary policy meeting, the Committee has noted the following:

• The war in the Middle East is still causing substantial uncertainty about the economic outlook. The temporary ceasefire between the United States and Iran has not yet led to normal shipping traffic through the Strait of Hormuz. Oil spot prices remain elevated, and futures prices are little changed since March. Gas prices have fallen, while various other commodity prices have risen. Overall external price pressures appear to be slightly stronger than expected in March.
• In Norway, inflation has been broadly as projected. Twelve-month CPI inflation rose to 3.6% in March, while CPI inflation adjusted for tax changes and excluding energy products (CPI-ATE) was unchanged at 3%. In this year’s wage settlement agreement, the norm for wage growth in manufacturing was set at a level close to our March projection of overall annual wage growth. The krone has appreciated and is stronger than assumed. A stronger krone will dampen imported price inflation.
• Labour market developments have overall been broadly as expected, and capacity utilisation still appears to be close to a normal level. Preliminary figures for the number of salaried employees indicate that employment has increased further in recent months, while registered unemployment is unchanged. According to LFS data, unemployment has increased slightly so far this year.

The Committee’s assessment is that the outlook for the Norwegian economy has not changed materially since the monetary policy meeting in March. Inflation is too high, and there are prospects that inflation will remain elevated ahead. High inflation over time can lead firms and households to plan for persistently high inflation. It may then become more difficult to bring inflation down again. The Committee judges that a higher policy rate is needed to return inflation to target within a reasonable time horizon.

The policy rate forecast presented in March indicated an increase in the policy rate to between 4¼% and 4½% by the end of the year. The monetary policy outlook does not appear to have changed materially since that time.

“The policy rate forecast presented in March implied the potential need for further tightening of monetary policy later this year. The monetary policy outlook does not appear to have changed materially since March, but the war in the Middle East is still causing substantial uncertainty about the economic outlook”, says Governor Ida Wolden Bache.

If the economy takes a different path than currently envisaged, the policy rate path may also differ from that implied by the forecast in the previous Report.

New forecasts were not prepared for this meeting. Monetary Policy Report 2/26 will be published together with the policy rate decision on 18 June 2026.