Rate effective from 27 March 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

Norges Bank is tasked with keeping inflation low and stable. The operational target is inflation of close to 2% over time. We are also mandated to help keep employment as high as possible and to promote economic stability.

In recent years, the tightening of monetary policy has contributed to cooling down the Norwegian economy and to dampening inflation. Last year, the policy rate was reduced from 4.5 to 4%. Since the monetary policy meeting in December, the Committee has noted the following:

• Inflation has been markedly higher than projected. At the same time, wage growth is projected to be higher this year than projected in December, which will likely restrain disinflation ahead. On the other hand, the krone has appreciated considerably. A stronger krone will dampen imported goods inflation.
• Capacity utilisation in the Norwegian economy appears to be holding steady at close to a normal level. Unemployment has been slightly lower than projected in December. Nonetheless, Norges Bank’s Regional Network contacts report that it has become a little easier to recruit.
• The war in the Middle East has led to high volatility in energy and financial markets. Oil and gas prices have increased sharply. At the same time, global equity indices have declined, and interest rates have increased both abroad and in Norway. Higher energy prices will likely reduce global growth and push up inflation both abroad and in Norway.

The job of tackling inflation has not been fully completed. The Committee placed emphasis on the fact that inflation has remained above target for several years now and that there are prospects for higher inflation ahead than previously projected. High inflation over time can lead firms and households to plan for greater inflation persistence. Inflation may then become entrenched.

The Committee judges that a tighter monetary policy stance is needed to return inflation to target within a reasonable time horizon. The inflation outlook indicates that an increase in the policy rate will likely be required. At the same time, the unexpected high inflation in recent months makes it difficult to assess underlying inflation pressures, and the uncertainty surrounding oil and gas prices is unusually elevated. The Committee therefore wants to await further information on the prospects for inflation.

The Committee decided to keep the policy rate unchanged at this meeting. The outlook is associated with substantial uncertainty, but if the economy evolves broadly as currently envisaged, the policy rate will likely be raised at one of the forthcoming meetings.

Chart A more restrictive monetary policy is needed

The policy rate forecast has been revised up since December and indicates an increase in the policy rate to between 4¼ and 4½% by the end of this year.

With a policy rate in line with the forecast, inflation is expected to decline from next year and reach 2.0% in 2029. A higher policy rate will cool the economy somewhat, and registered unemployment is projected to edge somewhat higher to around pre-pandemic levels.

The future path of the policy rate will depend on economic developments. The outlook is subject to greater uncertainty than normal due to the war in the Middle East. There have recently been wide swings in energy prices and the krone exchange rate. If energy prices remain elevated or move higher, inflation pressures may build up further. On the other hand, energy prices may fall back faster if the war ends swiftly and there is limited damage to infrastructure. At the same time, the krone could depreciate again should oil prices fall or financial market turbulence increase.

If the outlook indicates higher inflation than currently projected, a higher policy rate than currently envisaged may be required. If labour market conditions become weaker than projected or the outlook indicates a faster decline in inflation to target, the policy rate may become lower than currently envisaged.

Ida Wolden Bache
Pål Longva
Øystein Børsum
Hilde C. Bjørnland 
Steinar Holden 

25 March 2026 

At its meeting on 25 March 2026, Norges Bank’s Monetary Policy and Financial Stability Committee decided to keep the policy rate unchanged at 4 percent. This is a summary of the deliberations and assessments leading to the policy rate decision. The analyses in the March 2026 Monetary Policy Report form the basis for the assessments. The analyses in the Report are based on data up to and including 20 March. There have since been movements in energy and financial markets. The overall picture presented in the Report would not have been changed materially as a result of these movements. The monetary policy decision and the assessments are based on data up to the Committee meeting on 25 March.

International economy and financial markets

The Committee was concerned with the substantial uncertainty surrounding the global economic outlook. The war in the Middle East has led to wide swings in energy and commodity markets, and different uncertainty indicators have increased. The closure of the Strait of Hormuz and strikes on oil and gas infrastructure have increased the risk of the war leading to long-lasting effects on oil and gas supply and severe disruptions to global supply chains. Oil and European gas prices are now substantially higher than at the time of the previous Report, and other commodity prices and freight rates have also risen. The Committee noted that the analyses assume that energy prices follow futures prices, which indicate that prices will decline ahead. Futures prices are nevertheless higher than in December but have risen less than spot prices.

The surge in energy prices has led to a pronounced increase in short-term inflation expectations for a number of countries, with an associated rise in policy rate expectations. The Committee noted that interest rate expectations for Norway have risen more than elsewhere, with some of the rise occurring after the publication of the high figure for CPI inflation in January. The krone has appreciated and is stronger than previously assumed. The krone appreciation has coincided with higher oil prices and a wider interest rate differential against trading partners.

There is still uncertainty about future tariff rates. In February, the US Supreme Court ruled that many of the tariffs on US imports were unconstitutional. They were replaced by across-the-board tariffs of 10 percent on US imports from all countries. The tariff changes since the previous Report are likely to have a limited effect on the Norwegian and global economy.

Economic growth among our main trading partners has been a little stronger than expected. Higher energy prices are expected to dampen growth ahead, particularly in Europe. Overall, the growth projections for trading partners this year and next have been revised down somewhat since December. Consumer price inflation in Sweden and the euro area is close to target, while inflation remains somewhat higher among other main trading partners. Higher energy prices are expected to push up inflation among our trading partners ahead.

Activity in the Norwegian economy and the labour market

In its discussion on economic activity in Norway, the Committee noted that labour market conditions are now slightly stronger than in December. Registered unemployment has held steady at 2.1 percent since December, which is a little lower than projected in the previous Report. The number of persons registered as fully unemployed declined in both January and February. LFS unemployment has been stable since September last year after rising for a period. At the same time, Norges Bank’s Regional Network contacts report that it has become a little easier to recruit.

Employment increased broadly as projected in 2025 Q4, and preliminary figures for the number of salaried employees indicate that employment increased further at the beginning of the year. Growth in the Norwegian economy in 2025 Q4 was a little weaker than projected, but due to historical revisions, the activity level was nevertheless higher than projected in the previous Report. Regional Network contacts expect stable output growth in the period to summer, but slightly fewer contacts point to capacity constraints. Overall, the analyses indicate that capacity utilisation in the Norwegian economy is close to a normal level and little changed since the previous Report.

The Committee noted that the analyses indicate a continued moderate upswing in the Norwegian economy and that growth will be a little higher this year than previously projected. There were wide swings in households’ car purchases around the turn of the year in anticipation of the increase in electric vehicle taxes. Services consumption strengthened towards the end of last year, and goods consumption excluding cars appears to have increased further into this year. Housing investment is showing some signs of a modest pickup, but the level is still very low.

Members discussed the potential effects of the war in the Middle East and of higher energy and commodity prices in particular on the Norwegian economy. On the one hand, higher energy and commodity costs are expected to dampen economic growth among trading partners and hence demand for Norwegian export goods too. Norwegian firms could also face higher costs, which may in turn curb activity. Higher energy prices also push up consumer price inflation and lead to lower household real disposable income, but the effect is diminished by the fixed electricity price scheme. On the other hand, higher commodity prices are expected to boost petroleum investment and profitability in some manufacturing segments. The analyses indicate that the overall effect of higher energy prices on the Norwegian economy is limited, but the Committee acknowledged that there is a risk that the war may last for a long time, with increased supply-side disruptions and persistently high energy prices. The global economy could then be severely impacted and exacerbate negative growth impulses to the Norwegian economy further ahead.

Inflation

The Committee gave special attention to the fact that inflation has been markedly higher than expected. Twelve-month CPI inflation was 2.7 percent in February, 0.8 percentage point higher than projected. CPI inflation adjusted for tax changes and excluding energy products (CPI-ATE) was 3.0 percent in February, 0.4 percentage point higher than projected in the previous Report.

Members noted that the higher level of inflation was broad-based and was due not only to temporary conditions according to the analysis. The Committee gave weight to the fact that domestic inflation in particular has been higher than expected and is the main driver of high overall inflation. Rent inflation, for example, has accelerated and the rent weight in the CPI has been increased. The Committee noted that the analyses point to continued higher rent inflation than previously assumed.

In assessing the drivers of inflation, members pointed to the uncertainty surrounding wage growth ahead. Wage growth was lower in 2025 than in 2024, and wage expectations, as measured in Norges Bank’s Regional Network and Expectations Survey, indicate that wage growth will continue to moderate this year. The Committee discussed to what extent higher price inflation could translate into higher wage inflation. Members noted that the Norwegian Technical Calculation Committee for Wage Settlements projects inflation at 3.2 percent this year, which is markedly higher than the projection in the previous Monetary Policy Report. New national accounts data indicate that manufacturing’s ability to raise wages is still strong and will likely increase due to higher energy and commodity prices despite the krone appreciation. The Committee noted that the analyses indicate that wage growth will be higher ahead than projected in the previous Report.

Higher energy prices will drive up overall consumer price inflation, both directly and via increased prices for imported consumer and intermediate goods. An increase in firms’ costs could also lead to a rise in domestic goods and services inflation. Members took account of the uncertainty surrounding the inflation outlook due to the wide swings in oil and gas prices. Should energy prices remain elevated or edge higher, inflation pressures may build up further. On the other hand, energy prices may fall back faster if the war ends swiftly and if there is limited damage to infrastructure. At the same time, the krone could depreciate again should oil prices fall or financial market turbulence increase.

The krone appreciation since December will in isolation push down imported consumer goods inflation ahead. Members pointed out however that the krone appreciation must be seen in the context of a wider interest rate differential. Market-implied policy rate expectations are considerably higher than the policy rate forecast in the previous Report, and the market has priced in up to two policy rate hikes this year. The krone could therefore depreciate if the monetary policy stance is not tightened relative to the previous Report.

Monetary policy stance

In considering the monetary policy stance, members discussed the degree of restrictiveness of the current monetary policy stance. On the one hand, the real economy has over a period strengthened more than projected, and progress on disinflation seems to have stalled. At the same time, it was pointed out that activity had mainly increased more than projected in the export industry, petroleum-related industry and the public sector which are less sensitive to interest rates. It was also pointed out that the construction industry, which is highly interest rate sensitive, has been weaker than expected in recent years. Members judged that the monetary policy stance is still having a restrictive impact on the Norwegian economy.

The Committee placed emphasis on the fact that inflation has remained above target for several years now. Members recognised that with the policy rate path from December, inflation would remain above target for longer than previously projected. Members underlined the importance of monetary policy reacting to prospects for higher inflation. High inflation over time can lead firms and households to start adjusting their behaviour and plan for greater inflation persistence. Inflation may then become entrenched. In the deliberations, members pointed out that such mechanisms are probably not sufficiently captured by the models used for the analyses. At the same time, the Committee was concerned with avoiding a stance that could restrict the economy more than needed. A higher policy rate could lead to an increase in unemployment. It was also pointed out that a tighter monetary policy could delay the upswing in the construction industry.

Members agreed that a tighter monetary policy stance was needed to return inflation to target within a reasonable time horizon, and that the inflation outlook now indicates that an increase in the policy rate will likely be required.

The Committee discussed whether the policy rate should be raised already at this meeting. In the deliberations, some members placed particular emphasis on the fact that inflation has remained above target for a long time and that higher commodity prices are adding to inflation pressures. These members were concerned that inflation expectations could rise and argued that this suggested that the policy rate should be raised now. Others gave more weight to the difficulty of assessing underlying inflation pressures in view of the unexpected high inflation in the past months and the substantial uncertainty about the impact of higher oil and gas prices on inflation ahead. In their view, it could be appropriate to await further information on the prospects for inflation.

After thorough discussions, all members agreed to support the decision to keep the policy rate unchanged now and to signal that it will likely be necessary to raise the policy rate at one of the forthcoming monetary policy meetings.

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Committee members in attendance: Ida Wolden Bache, Pål Longva, Øystein Børsum, Hilde C. Bjørnland and Steinar Holden