Rate decision January 2026
At its meeting on 21 January 2026, the Committee decided to keep the policy rate unchanged at 4 percent.
Rate decision - press release
Policy rate kept unchanged at 4 percent
Norges Bank’s Monetary and Financial Stability Committee decided to keep the policy rate unchanged at 4 percent at its meeting on 21 January. The outlook is uncertain, but if the economy evolves broadly as currently envisaged, the policy rate will be reduced further in the course of the year.
Monetary policy has contributed to cooling down the Norwegian economy and to dampening inflation in recent years. Inflation has fallen markedly but is still above the 2 percent target. At the same time, unemployment has increased somewhat. Capacity utilisation in the economy has declined and is close to a normal level. The policy rate was reduced from 4.5 percent to 4 percent last year.
“We are not in a hurry to reduce the policy rate further. Inflation is still too high. Inflation excluding energy prices has been close to 3 percent since autumn 2024”, says Governor Ida Wolden Bache.
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 December was consistent with one to two rate cuts in the course of 2026. The geopolitical situation is causing uncertainty, but the Committee's current assessment is that the interest rate outlook has not changed materially since December. The Committee judges that it is appropriate to keep the policy rate unchanged at this meeting.
“The current geopolitical situation is tense and is causing uncertainty, including about the economic outlook”, says Governor Ida Wolden Bache.
The future path of the policy rate will depend on economic developments. If labour market conditions weaken more than expected or the outlook indicates that inflation will return to target faster, the policy rate may be lowered faster than envisaged in December. On the other hand, if growth in business costs remains elevated for longer, or the krone proves weaker than projected, inflation could remain elevated for longer than projected in December. A higher policy rate than envisaged at that time may then be required.
The Committee will have received more information about economic developments ahead of its next monetary policy meeting in March, when new forecasts will be presented.
New forecasts were not prepared for this meeting. Monetary Policy Report 1/26 will be published along with the monetary policy decision on 26 March 2026.
Rate effective from 23 January 2026:
- Policy rate: 4.0 %
- Overnight lending rate: 5.0 %
- Reserve rate: 3.0 %
Contact:
Press telephone: +47 21 49 09 30
Email: presse@norges-bank.no
Press conference - video
15:45
Governor Ida Wolden Bache: Press conference on 22 January at 10.30 am (In Norwegian)
Press conference - Introductory statement by Governor Ida Wolden Bache
Policy rate kept unchanged
Introductory statement by Governor Ida Wolden Bache at the press conference following the announcement of the policy rate on 22 January 2026.
Chart 1: Policy rate kept unchanged
Norges Bank’s Monetary and Financial Stability Committee decided to keep the policy rate unchanged at 4 percent. If the economy evolves broadly as currently envisaged, the policy rate will be reduced further in the course of the year.
Norges Bank is tasked with keeping inflation low and stable. The operational target is inflation of close to 2 percent over time. We are also mandated to help keep employment as high as possible and to promote economic stability.
In response to the inflation surge in 2022, we raised the policy rate sharply and rapidly, and in recent years the tightening of monetary policy has contributed to cooling down the Norwegian economy and to dampening inflation. Last year, we began a cautious normalisation of monetary policy and reduced the policy rate from 4.5 percent to 4 percent.
We are not in a hurry to reduce the policy rate further. The job of tackling inflation has not been fully completed, and if the policy rate is lowered too quickly, inflation could remain above target for too long. On the other hand, we do not want to restrain the economy more than needed.
Let me say a few words about what the Committee emphasised this time.
The current geopolitical situation is tense and is causing uncertainty, including about the economic outlook. The US threatened at the weekend to raise tariffs on goods from Norway and other countries that have had military personnel in Greenland. Yesterday evening, after the Committee took its monetary policy decision, it was announced that the tariff increases would not be imposed. The Committee’s assessment is that the announced tariff increases would likely have had a limited impact on the Norwegian economy.
Chart 2: Inflation is still too high
Inflation is still too high. Inflation excluding energy prices has been close to 3 percent since autumn 2024. In December, underlying inflation was broadly as projected in the previous Report. It is primarily the rapid rise in prices for food and many services that is contributing to keeping inflation elevated. The strong growth in business costs over the past years will likely restrain disinflation ahead, but lower wage growth is expected to push down inflation further out.
Chart 3: Unemployment has increased somewhat in recent years
Unemployment has increased somewhat in recent years, and the employment rate has decreased a little. New labour market information points in slightly different directions. Registered unemployment has declined a bit and been slightly lower than projected in December, while employment growth appears to be a little weaker than projected.
Chart 4: We do not expect a large decrease in the policy rate
The interest rate forecast we presented in December was consistent with one to two rate cuts in the course of 2026. The geopolitical situation is causing uncertainty, but the Committee's current assessment is that the interest rate outlook has not changed materially since December.
The future path of the policy rate will depend on economic developments. The Committee will have received more information about economic developments ahead of its next monetary policy meeting in March, when new forecasts will be presented.
The Committee's assessment
Norges Bank’s Monetary and Financial Stability Committee unanimously decided to keep the policy rate unchanged at 4 percent at its meeting on 21 January. The outlook is uncertain, but if the economy evolves broadly as currently envisaged, the policy rate will be reduced further in the course of the year.
About the Committee's assessment
The Committee’s assessment summarises the Monetary Policy and Financial Stability Committee members’ assessments that led to the monetary policy decision at the meeting on 21 January 2026. New forecasts were not prepared for this meeting. New information was assessed against the projections in Monetary Policy Report 4/25, which was published on 18 December 2025. The policy rate forecast in the Report was consistent with one to two rate cuts in 2026 and a further reduction to somewhat above 3 percent towards the end of 2028. The number of registered unemployed was expected to increase a little over the next couple of years, but the unemployment rate would likely remain close to 2.2 percent. With a gradual decline in wage growth ahead, inflation was projected to move down and be close to 2 percent in 2028.
The operational target of monetary policy is annual consumer price inflation of close to 2 percent over time. Inflation targeting shall be forward-looking and flexible so that it can contribute to high and stable output and employment and to counteracting the build-up of financial imbalances.
Monetary policy has contributed to cooling down the Norwegian economy and to dampening inflation in recent years. Inflation has fallen markedly but is still above target. At the same time, unemployment has increased somewhat. Capacity utilisation in the economy has declined and is close to a normal level. The policy rate was reduced from 4.5 percent to 4 percent last year.
The outlook for the international economy remains highly uncertain. The Committee was concerned with the rise in political tensions. The US has threatened to raise tariffs on goods from Norway and seven other European countries that have had military personnel in Greenland. The announced tariff increases are likely to have a limited impact on the Norwegian economy, but an escalation of the trade conflict could amplify the effects on the Norwegian and international economy. Increased trade barriers can dampen economic growth, while their effects on the inflation outlook for Norway are uncertain.
Major equity indices have declined somewhat in recent days but are still a little higher than at the time of the previous Report, and risk premia have remained low. Oil and gas prices have increased since December.
The figures that have come in since the previous monetary policy meeting may indicate that economic activity among our trading partners increased somewhat more in 2025 than projected in the December Report. International forecasters have made little change to their growth forecasts for our trading partners since December. Inflation among our main trading partners has fallen a bit further, and inflation in Sweden and the euro area is close to their inflation targets. International policy rate expectations are little changed since December. The market expects the Norwegian policy rate to be reduced one to two times this year. The market’s pricing of money market premia ahead is little changed since the December monetary policy meeting. The krone exchange rate has shown little change in recent weeks and is close to that projected in the previous Report.
New labour market information points in slightly different directions. According to the Labour Force Survey, there was little change in unemployment through autumn last year after a steady increase from the beginning of the year. Registered unemployment fell to 2.1 percent in December, which was slightly lower than expected. On the other hand, the latest figures for the number of salaried employees may indicate that employment was somewhat lower in the fourth quarter than projected. The number of new job vacancies declined somewhat through the second half of last year.
Retail sales growth was strong in November, and car purchases increased markedly in December as expected. Overall, household consumption appears to have evolved broadly as projected in the December Report. House prices were lower in December than expected. The number of building permits has ticked up since the previous Report, but new home sales are still very low.
The Committee gave special attention to the fact that inflation is above target and that underlying inflation has been close to 3 percent for some time. Since the previous Report, underlying inflation has been broadly as projected, while overall inflation has been somewhat higher than projected. Twelve-month CPI inflation rose to 3.2 percent in December, while CPI inflation adjusted for tax changes and excluding energy products (CPI-ATE) rose to 3.1 percent. The rapid rise in prices for food and many services is contributing to keeping inflation elevated. Households’ housing costs, which represent a large portion of the CPI, are still rising at a fast pace. The strong growth in business costs over the past years will likely restrain disinflation ahead, but lower wage growth is expected to push down inflation further out.
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 December was consistent with one to two rate cuts in the course of 2026. The geopolitical situation is causing uncertainty, but the Committee's current assessment is that the interest rate outlook has not changed materially since December. The Committee judges that it is appropriate to keep the policy rate unchanged at this meeting.
The future path of the policy rate will depend on economic developments. If labour market conditions weaken more than expected or the outlook indicates that inflation will return to target faster, the policy rate may be lowered faster than envisaged in December. On the other hand, if growth in business costs remains elevated for longer, or the krone proves weaker than projected, inflation could remain elevated for longer than projected in December. A higher policy rate than envisaged at that time may then be required.
The Committee will have received more information about economic developments ahead of its next monetary policy meeting in March, when new forecasts will be presented.
Ida Wolden Bache
Pål Longva
Øystein Børsum
Hilde C. Bjørnland
Steinar Holden
21 January 2026
Countercyclical capital buffer
Countercyclical capital buffer unchanged at 2.5 percent
At its meeting on 21 January 2026, Norges Bank's Monetary Policy and Financial Stability Committee decided to keep the countercyclical capital buffer rate unchanged at 2.5 percent.
About the countercyclical capital buffer
The countercyclical capital buffer is intended to strengthen banks’ solvency and mitigate the risk that banks amplify an economic downturn.
The countercyclical capital buffer is intended, in principle, to range between 0 percent and 2.5 percent. Norges Bank will normally set the buffer rate in the upper part of this range. If a downturn will or could cause a marked reduction in credit supply, the countercyclical capital buffer rate should be lowered. In the event of particularly high cyclical vulnerabilities, the countercyclical capital buffer rate may be set above 2.5 percent. If cyclical vulnerabilities recede significantly over time and the outlook for financial stability is positive, the buffer rate may be reduced. Norges Bank sets the countercyclical capital buffer rate each quarter.
Continued heightened risk of events that could weaken financial stability
The outlook for the international economy remains highly uncertain. Geopolitical tensions have increased, and the US has threatened to raise tariffs on goods from Norway and seven other European countries that have had military personnel in Greenland. The announced tariff increases are likely to have a limited impact on the Norwegian economy, but an escalation of the trade conflict could amplify the effects on the Norwegian and international economy. Major equity indices have declined somewhat in recent days but remain at high levels, and risk premia have remained low.
In a global, interconnected financial system, shocks may quickly impact the Norwegian financial system, and the risk of events that could weaken financial stability remains heightened. Financial system vulnerabilities could amplify a potential downturn in the Norwegian economy and lead to bank losses.
Households and firms have ample access to credit
In Norges Bank’s lending survey for 2025 Q4, banks reported approximately unchanged credit standards and household and corporate credit demand. Banks also expect unchanged standards and demand in 2026 Q1. Bond market activity was high in 2025, mainly due to large volumes reaching maturity. Corporate credit spreads are close to the average for the past ten years. In Norges Bank’s overall assessment, households and firms have ample access to credit.
Household debt is rising less than income
High and rapidly rising debt can amplify economic downturns and increase the risk of financial crises. In recent years, total household debt has risen less than income. Debt-to-income (DTI) ratios have declined broadly across households and most for those with the highest debt (see Financial Stability Report 2025 H2).
Household credit growth increased somewhat through 2025, and the twelve-month rise was 4.5 percent in November. This increase followed a period of slower economic growth, and credit growth is still lower than in the pre-pandemic years. Credit growth is normally closely linked to house price inflation, which was high at the beginning of 2025 but has been more moderate since then.
When DTI ratios decline over time, the household sector becomes less vulnerable to interest rate increases and loss of income. This vulnerability may increase again if looser financial conditions result in rapidly rising house prices and debt.
Stable developments in commercial real estate, but real estate developers still face challenges
Overall, Norwegian firms are robust. Corporate credit growth was 2.2 percent in November. Credit growth slowed in 2025 H2 and is significantly below the average for the past ten years. Low corporate credit growth must be viewed in the light of weak developments in mainland business investment in recent years.
The share of bankruptcies among Norwegian firms has risen in recent years. In 2025, the overall share of bankruptcies was at approximately the same level as the average for the past decade. Bankruptcies in real estate development rose markedly in 2025, many of which were among real estate developers with high bank debt. Somewhat higher bank losses on exposures to real estate development are expected in 2026. In 2025 Q4, Regional Network contacts in construction expected activity levels to decline further in the quarters ahead. Expectations were more muted than in 2025 Q3, but some contacts also report plans to launch new housing construction projects this winter.
Banks' CRE exposures are high. Commercial property selling prices rose at the beginning of 2025 but have since remained flat. Stable developments in selling prices are expected in the coming years (see Financial Stability Report 2025 H2). In 2025, the transaction volume was low in the office segment but picked up in other segments. Most transactions in the market for prime real estate in Oslo in 2025 were unleveraged.
Financial system resilience is strong and must be maintained
Norwegian banks are highly profitable and satisfy capital and liquidity requirements by a solid margin. Bank losses remain low. The solvency stress test in Financial Stability Report 2025 H1 shows that banks can absorb large credit losses while maintaining lending.
The countercyclical capital buffer requirement strengthens financial system resilience. Norges Bank’s Monetary Policy and Financial Stability Committee considers the Norwegian financial system to be robust.
The Committee unanimously decided to keep the countercyclical capital buffer rate unchanged at 2.5 percent.
Ida Wolden Bache
Pål Longva
Øystein Børsum
Hilde C. Bjørnland
Steinar Holden
21 January 2026