Norges Bank refers to the letter of 4 September 2026 from the Ministry of Finance with a proposal on a new monetary policy regulation, which was submitted to Norges Bank to give the Bank the opportunity to express its opinion pursuant to Section 1-4, first paragraph, of the Act relating to Norges Bank and the Monetary System, etc. (Central Bank Act).

Norges Bank’s Monetary Policy and Financial Stability Committee considered the statement at its meeting on 8 September 2026.

Norges Bank’s experiences with the current Regulation on Monetary Policy are positive.[1] The Regulation sets out the primary objective of low and stable inflation in the form of a numerical target for consumer price inflation. At the same time, the Regulation has provided Norges Bank with an effective framework for managing the trade-offs between low and stable inflation and high and stable output and employment in the face of various shocks.

The Ministry of Finance proposes the removal of Sections 2 and 4 of the Regulation, while the wording in Sections 1 and 3 is retained. Norges Bank considers that Sections 2 and 4 do not contain any further substantive specification beyond that stipulated in the Central Bank Act concerning instrument independence and reporting requirements. Norges Bank places great emphasis on transparency regarding monetary policy assessments and trade-offs.  

Section 1 of the proposal on a new regulation stipulates that low and stable inflation is the primary objective of monetary policy. Low and stable inflation over time is a precondition for a well-functioning economy. It also provides the best possible basis for high output and employment in the long term.

Section 2, first sentence, of the proposal on a new regulation specifies the inflation target itself. The target variable is the consumer price index (CPI), and the numerical target is 2 percent. Norges Bank interprets the wording “over time” and “close to” as signifying that inflation cannot be fine-tuned, and that the aim of stabilising inflation in the short term must be weighed against other considerations.

Section 2, second sentence, sets out that monetary policy shall contribute to high and stable output and to counteracting the build-up of financial imbalances. High employment is a primary objective of economic policy, and monetary policy shall support that objective.

Output and employment considerations have a bearing on how fast Norges Bank seeks to bring inflation back to target in the event of deviation. At the same time, Norges Bank finds no evidence to suggest that an expansionary monetary policy can achieve higher employment over time by permitting higher inflation. The Bank therefore interprets “high” to mean the highest sustainable level of employment over time. This level is primarily determined by structural conditions such as wage formation, the tax and social security system and demographic composition.

Financial imbalances raise the risk of a severe economic downturn further out. Norges Bank interprets the aim of counteracting the build-up of financial imbalances to be largely derived from the aim of high and stable output and employment over time.

Monetary policy cannot take primary responsibility for counteracting the build-up of financial imbalances. The regulation and supervision of financial institutions are the most important tools for cushioning shocks to the financial system.

The new regulation will not entail any changes to the conduct of monetary policy.   

Yours sincerely

Ida Wolden Bache
Governor

Ole Christian Bech-Moen
Executive Director of Monetary Policy

[1] In connection with the review, the Ministry asked Norges Bank to submit a written assessment of its experience with the current Regulation on Monetary Policy, together with an assessment of international experiences, including the experience with supply-side shocks, and recent international research on monetary policy. The memo containing the Bank’s assessments was submitted to the Ministry of Finance on 27 March 2026 and is published on Norges Bank’s website.