Rate decision May 2026
At its meeting on 6 May 2026, the Committee decided to raise the policy rate from 4% to 4.25%.
Press release
Policy rate raised to 4.25%
Norges Bank’s Monetary Policy and Financial Stability Committee decided to raise the policy rate from 4% to 4.25% at its meeting on 6 May. The monetary policy outlook does not appear to have changed materially since the monetary policy meeting in March, but there is substantial uncertainty about future economic developments.
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.
Rate effective from 8 May 2026:
- Policy rate: 4.25%
- Overnight lending rate: 5.25%
- Reserve rate: 3.25%
Contact:
Press telephone: +47 21 49 09 30
Email: presse@norges-bank.no
Presse conferanse - video
Governor Ida Wolden Bache: Press conference on 7 May at 10.30 am (In Norwegian)
Press conference - Introductory statement by Governor Ida Wolden Bache
Policy rate raised to 4.25 percent
Introductory statement by Governor Ida Wolden Bache at the press conference following the announcement of the policy rate on 7 May 2026.
Chart: Policy rate raised to 4.25 percent
The Monetary and Financial Stability Committee has decided to raise the policy rate by 0.25 percentage point to 4.25 percent.
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.
Chart: Inflation has been above target for several years
At present, unemployment is neither especially high nor unusually low, and capacity utilisation appears to be close to a normal level. Inflation, however, is too high and has run above target for several years. A few weeks ago, figures came in showing that consumer price inflation stood at 3.6 percent. Excluding energy prices, which can vary widely from month to month, inflation has been around 3 percent over the past year and a half.
Prices for domestically produced goods are rising the fastest. In recent months, incoming data indicate that domestic inflation will remain elevated longer than we envisaged at the start of the year. The war in the Middel East has led to increased prices for oil and various other commodities, which will also probably lead to higher imported inflation ahead. The recent krone appreciation will dampen imported price inflation.
Many are questioning whether it is appropriate to raise the policy rate in the current situation where many other prices are rising and the temperature of the economy is not particularly high. Some are of the view that we should not react to a rise in inflation caused by an increase in oil prices or other conditions we cannot influence.
Let me say a few words about that.
Chart: Wages have increased markedly in recent years
The Committee judged it appropriate to raise the policy rate not only because of the war in the Middle East and the associated increase in oil and other commodity prices. An important reason why inflation remains elevated is that wages have increased markedly in recent years.
Wage growth is moderating and is not high compared with manufacturing profitability. The principle of the Norwegian wage determination model is precisely that workers should receive their share of value added in manufacturing. The growth in wages, however, increases firms’ costs, which will in turn contribute to keeping inflation elevated.
On top of that, global price pressures have intensified.
Chart: Oil prices have risen sharply
Oil prices rose sharply after the United States and Israel attacked Iran at the end of February and have since remained high. Prices for other commodities, such as aluminium and fertilisers, have also increased due to the war.
Of course, Norges Bank cannot influence global prices, but that does not mean we can disregard them in the conduct of monetary policy. Increased energy prices and other commodity prices can spill over into domestic prices and contribute to keeping domestic inflation elevated. Increased energy prices directly affect households through higher petrol and diesel prices, and indirectly through higher costs for airlines and other businesses, which in turn may be passed on to the prices facing consumers. Higher prices for Norwegian exports can also raise profitability in some manufacturing industries, and in turn lead to higher wage growth.
By raising the policy rate, we are contributing to bringing down inflation. Both Norwegian and international research provides meaningful evidence that higher interest rates have a dampening effect on inflation.
Financial market participants generally take it for granted that we will react to prospects for higher inflation by tightening monetary policy. That confidence is valuable and helps us keep inflation low and stable.
The effect of monetary policy cannot only be measured in terms of how a single policy rate change affects the economy. If we over time do not react systematically to prospects for high inflation, we could risk eroding confidence in the inflation target. The krone could then weaken markedly, and prices continue to rise rapidly. Should that happen, a sharp increase in the policy rate would be needed to bring inflation down again, with potentially high costs in the form of job losses.
Confidence in the inflation target has been built over time. Preserving credibility requires us to deliver on the promise of returning inflation to target. With confidence in low and stable inflation, we are better equipped to address new shocks and periods of turbulence in the future.
Chart: The Committee judged it appropriate to raise the policy rate at this meeting
At our previous monetary policy meeting in March, the Committee judged that it would likely be appropriate to raise the policy rate at one of the forthcoming monetary policy meetings. The information on the inflation outlook we have received in recent weeks supports the analyses we presented in March, and the Committee collectively judged it appropriate to raise the policy rate at this meeting.
The policy rate forecast presented in March indicated an increase in the policy rate to between 4¼ percent and 4½ percent by the end of the year. The policy rate path thus implied the potential need for further tightening of monetary policy later this year. We have not prepared new forecasts this time, but the monetary policy outlook does not appear to have changed materially since March.
In the March projections, inflation declines to 2.0 percent in 2029. A higher policy rate will cool the economy, and registered unemployment is projected to increase somewhat to around pre-pandemic levels. There are prospects that wages will rise faster than prices and that most people will see their purchasing power increase – even when factoring in higher interest expenses.
The war in the Middle East is still causing substantial uncertainty about the economic outlook. If the economy takes a different path than currently envisaged, the policy rate path may differ from that implied by the forecast.
The introduction was published when the press conference started at 10.30 am.
Monetary policy statement
Norges Bank’s Monetary Policy and Financial Stability Committee decided unanimously to raise the policy rate from 4% to 4.25% at its meeting on 6 May. The monetary policy outlook does not appear to have changed materially since the monetary policy meeting in March, but there is substantial uncertainty about future economic developments.
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.
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.
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 Committee decided to raise the policy rate from 4% to 4.25%. 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.
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.
Ida Wolden Bache
Pål Longva
Øystein Børsum
Hilde C. Bjørnland
Steinar Holden
6 May 2026
Summary of the Committee’s deliberations
Monetary policy meeting on 6 May 2026
At its meeting on 6 May 2026, Norges Bank’s Monetary Policy and Financial Stability Committee decided to raise the policy rate from 4 percent to 4.25 percent. This is a summary of the deliberations and assessments leading to the policy rate decision.
New forecasts were not prepared for this meeting. New information was assessed against the projections in Monetary Policy Report 1/26, which was published on 26 March 2026. The policy rate forecast in the Report indicated an increase in the policy rate to between 4¼ percent and 4½ percent by the end of 2026. With such a path, inflation was expected to decline from next year and reach 2.0 percent in 2029, and registered unemployment was projected to edge somewhat higher.
International economy and financial markets
The Committee was concerned with the substantial uncertainty still surrounding the global economic outlook. The temporary ceasefire between the United States and Iran announced on 8 April 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 the monetary policy meeting in March. Gas prices have fallen. Futures prices indicate that oil and gas prices will decline ahead but will be higher than before the outbreak of the war in the Middle East. At the same time, freight rates and prices for various other commodities, including aluminium, have risen. The Committee noted that overall external price pressures appear to be slightly stronger than projected in March.
High energy prices are expected to drive up inflation among Norway’s trading partners ahead, with a likely dampening of economic growth. Some Committee members placed emphasis on the risk of a prolonged global oil shortage, which could have a large impact on oil prices and important implications for global economic activity. It appears that growth among Norway’s trading partners will be slightly lower in the first quarter than projected in the March Report. International forecasters have revised down their economic growth forecasts for Norway’s trading partners since March, and the GDP growth forecasts for 2026 are on average close to that projected in the March Monetary Policy Report. At the same time, they have revised up their inflation forecasts.
After the ceasefire came into effect, various uncertainty indicators have decreased somewhat but are still higher than before the war. Leading global equity indices have advanced since March.
Market-implied policy rate expectations abroad have changed little since March, while short-term policy rate expectations for Norway have risen slightly. The market has priced in rate hikes ahead in several countries, including Norway. The Committee noted that the krone has appreciated and is stronger than assumed in the March Report. Measured by the import-weighted exchange rate index (I-44), the krone is now at its strongest level since end-2022.
Activity in the Norwegian economy and the labour market
In its discussion of developments in the Norwegian economy, the Committee noted that registered unemployment has remained unchanged at 2.1 percent in recent months, slightly higher than projected. LFS unemployment has increased slightly so far this year. Some members pointed to surveys suggesting that finding work has become more difficult for new graduates. Preliminary figures for the number of salaried employees indicate that employment has risen broadly as expected in the first quarter of 2026. The number of job vacancies has also risen slightly in recent months. Overall, the labour market appears to be evolving broadly as expected.
There is uncertainty surrounding future developments in the Norwegian economy. Norway exports commodities that have now risen sharply in price, which will likely lead to increased profitability and higher activity in some manufacturing industries. On the other hand, higher commodity prices are expected to weigh down on growth among Norway’s trading partners and hence dampen demand for other Norwegian export goods. The analyses in the March Report indicated that the overall impact of higher commodity prices on activity in the Norwegian economy is likely limited.
Since March, there has been little new information on demand from households and firms. Indicators that have come in, for example indicators of retail sales and new car registrations, suggest that developments have not differed materially from the March projections. Capacity utilisation still appears to be close to a normal level. Certain members were attentive to the weak developments in construction activity. Since the March monetary policy meeting, house prices have risen broadly as projected, while new home sales and the number of building permits are still at low levels.
Inflation
The Committee gave special attention to the fact that inflation has been broadly as projected. Twelve-month CPI inflation was 3.6 percent in March, while CPI inflation adjusted for tax changes and excluding energy products (CPI-ATE) was 3.0 percent. Members noted that inflation is broad-based. An average of underlying inflation indicators has increased and was higher than CPI-ATE inflation in March.
In its discussion of the inflation outlook, members were attentive to new information pointing to elevated inflation ahead. According to Norges Bank’s System for Model Analysis in Real Time (SMART), which weights forecasts from a broad set of models, the inflation forecasts for the coming quarters are little changed since March. The krone appreciation since March will in isolation push down imported consumer and intermediate goods inflation ahead. Members remarked that market-implied policy rate expectations are higher than the policy rate forecast in the previous Report, and that the krone could depreciate in the absence of a rate hike.
The Committee noted that the wage norm for manufacturing was set at 4.4 percent in this year’s wage settlement, close to the projection of overall annual wage growth in the March Report. High growth in firms’ labour costs will likely contribute to keeping inflation elevated ahead.
Higher petroleum prices will drive up overall consumer price inflation, both directly and via increased prices for imported consumer and intermediate goods. The Committee noted that updated analyses of the effects of changes in oil prices on the Norwegian economy support the March inflation forecasts. At the same time, it was pointed out that the historical relationships observed in previous oil price shocks will not necessarily be representative today, partly because the composition of energy use and energy intensity in production has changed over time.
The Committee noted that prices for certain refined oil products, such as jet fuel, have risen sharply and that prices for some energy-intensive products, such as synthetic fertilisers, have also increased. Higher fertiliser prices could drive up food prices ahead. Members highlighted the importance of monitoring various commodity prices and their spillovers to other goods and services prices ahead.
Higher fuel prices pushed up CPI inflation in March. The Storting (Norwegian parliament) has approved a reduction in fuel taxes over the period to September 2026. This will temporarily dampen CPI inflation somewhat.
Monetary policy stance
In considering the monetary policy stance, members placed emphasis on the fact that inflation has remained above target for several years. High inflation over time can lead households and firms to plan for greater inflation persistence when they set prices and negotiate wages. It may then become more difficult to bring inflation down again. At the same time, members were concerned with avoiding a stance that could restrict the economy more than needed.
In deliberating the monetary policy decision at this meeting, members referred to the analyses and communication from the March monetary policy meeting. The Committee’s assessment of the inflation outlook implied that a higher policy rate will likely be needed to return inflation to target within a reasonable time horizon. At the same time, the Committee gave weight to 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 but signalled that the policy rate would likely be raised at one of the forthcoming monetary policy meetings.
The Committee’s assessment is that the outlook for the Norwegian economy has not changed materially since the monetary policy meeting in March. Members agreed that new information on underlying inflation pressures supports the analyses in the March Report and implies that inflation will remain elevated ahead. Members placed emphasis on the fact that there is still substantial uncertainty surrounding oil and gas prices ahead, but in light of the current prospects, it will likely take time for energy markets to normalise. Increased commodity prices will further add to inflation pressures.
The Committee collectively judged that a higher policy rate is needed to return inflation to target within a reasonable time horizon. The Committee decided to raise the policy rate by 0.25 percentage point to 4.25 percent.
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Committee members in attendance: Ida Wolden Bache, Pål Longva, Øystein Børsum, Hilde C. Bjørnland and Steinar Holden