Norges Bank Keeps Its Policy Rate at 4.5% and Stands Ready to Raise It if Needed

By The Edge Research Team

Norges Bank left its policy rate at 4.5% in a decision published on 5 November, keeping September’s increase and saying it stands ready to raise the rate if needed.

For Norwegian households and businesses, the policy rate stays at its highest since June 2025, and the bank’s September path keeps it close to this level until late 2027. In The Edge’s reading, a stronger krone and inflation close to forecast let the Committee wait for its December projections, while fast domestic price growth keeps a further increase on the table.

The Committee leaves rates unchanged after September’s increase

The decision was taken unanimously at the meeting on 4 November and published at 09:00 GMT. The policy rate stays at 4.50% from 6 November. The overnight lending rate remains 5.50% and the reserve rate 3.50%. The Monetary Policy and Financial Stability Committee said it had received no information indicating that the outlook had changed materially since September.

Governor Ida Wolden Bache said inflation is too high and that the policy rate will likely need to stay elevated for a time. The bank is “prepared to raise the policy rate if needed to bring inflation down to target”, she said.

The Committee raised the rate by a quarter point to 4.50% at its September meeting. That was the second increase this year, after a rise from 4% to 4.25% in May. The rate is now back at 4.5%, the level in force before a cut in June 2025.

September’s increase came after debate. The summary of that meeting shows some members saw a case for waiting, as underlying inflation had slowed, before all members agreed to support the rise. This time the summary records that members agreed to keep the rate unchanged.

Norges Bank’s recent policy rate decisions (in %)

Meeting dates and decisions as listed by the bank; every other meeting in the period (August, November and December 2025; January, March, June and August 2026) left the rate unchanged.

Inflation tracks the forecast, but domestic prices run hot

Twelve-month CPI inflation was 3.4% in September, while CPI inflation adjusted for tax changes and excluding energy products, the CPI-ATE, was 3.0%. Inflation has evolved broadly as projected, the Committee said.

Headline inflation came in 0.1 point below the projection of 3.5% in the September Monetary Policy Report. The CPI-ATE was 0.1 point above its projected 2.9%. An average of underlying inflation indicators was unchanged from August and close to the CPI-ATE rate.

Norwegian inflation against the September forecast (12-month change, in %)

Actual figures from the consumer price index release of 9 October 2026 and the August data shown in the September report; projections from Monetary Policy Report 3/2026 of 24 September 2026.

The split inside the index explains the bank’s concern. Prices of domestically produced goods and services are rising fastest and ran above the September projection, while imported consumer goods inflation slowed and came in below it.

Statistics Norway’s September figures show services prices up 3.8% over the year, against 3.0% for goods. Services where labour dominates rose 4.1%. Restaurant and accommodation prices were 6.0% higher, and insurance and financial services 7.9%.

Selected consumer price groups, September 2026 (change, in %)

Consumer price index (2025=100) published 9 October 2026; the monthly change is from August to September.

Tax changes also shape the headline. Adjusted for tax changes but including energy, the CPI-AT rose 5.2% over the year, 1.8 points above the CPI itself. The CPI-ATE strips out both tax changes and energy products.

At 4.5%, the policy rate sits 1.1 points above September’s CPI inflation. Against the CPI-ATE the gap is 1.5 points. These are simple backward comparisons: the bank’s own expected real rate is its projected policy rate over the next four quarters less projected CPI-ATE inflation, and it puts the neutral real rate between 0.25% and 1.75%.

A stronger krone works the other way

The Committee weighed two forces against each other. Gas and electricity prices have moved up and futures prices for oil have risen somewhat, though oil spot prices have fallen. The conflicts in the Middle East still create substantial uncertainty about the inflation outlook, it said.

The krone has appreciated and is stronger than assumed, which in isolation dampens inflation. At the bank’s daily rate, a dollar cost NOK 9.2278 on 4 November. That compares with NOK 10.0791 at the end of 2025.

The krone against the dollar and the euro (in NOK per unit)

Norges Bank’s daily exchange rates, middle rates published around 16:00 CET.

That makes the krone 9.2% stronger against the dollar since the end of last year. Since the September meeting it has gained 2.6%. Against the euro the gains are 13.9% and 3.9%.

The September report had already assumed a firmer krone. It put the import-weighted exchange rate index, the I-44, at an average of 112.3 in 2026, against 119.6 in 2025; a lower reading means a stronger krone.

The labour market has been firmer than expected. Registered unemployment was unchanged at 2.0% in October, a bit below the bank’s projection of 2.1%, and preliminary figures show employment rising a little more than expected.

Other activity data are close to forecast. Card data and retail sales point to household consumption rising broadly as projected, while new home sales and building permits remain very low. The Ministry of Finance estimates the 2027 budget proposal will have a broadly neutral effect on activity next year.

The December report will set the path

No new forecasts were prepared for this meeting, so the September report remains the reference. In it, the policy rate stays close to 4.5% for a period before declining somewhat. The forecast falls gradually from the end of 2027 to just below 3.5% towards the end of the projection period.

On that path, inflation slows from next year and reaches 2% in 2029, while registered unemployment edges up to slightly above pre-pandemic levels. The forecast rate averages 4.6% in 2027 and 4.2% a year later.

September forecasts for Norway (annual, in %)

Monetary Policy Report 3/2026 of 24 September 2026; CPI, CPI-ATE and mainland GDP are annual changes, registered unemployment and the policy rate annual averages. For 2029 the report shows CPI and CPI-ATE at 2.1, mainland GDP at 1.3, unemployment at 2.4 and the policy rate at 3.7.

Markets have moved a little since then. Norwegian policy rate expectations have declined slightly since the September report, the deliberations summary said, though the market is still pricing an increase by the end of the first half of 2027.

Sweden is tightening from a much lower level. Sveriges Riksbank raised its policy rate to 2% on 4 November, as set out here the same day, effective 11 November; that leaves Norway’s rate 2.5 points higher. Since summer several central banks have raised rates, the Governor noted, and more increases are expected.

The risks the Committee named cut both ways. Inflation that stays high for long can become stickier and harder to bring down, it said, yet it does not want to restrict the economy more than needed. Capacity utilisation is already slightly below a normal level.

What to watch: Statistics Norway publishes the October CPI on 10 November. The September report projected 3.8% for the CPI and 2.7% for the CPI-ATE in October. Norges Bank publishes its next policy rate decision on 17 December, together with Monetary Policy Report 4/26 and new forecasts.

Figures are from Norges Bank’s press release and decision page of 5 November 2026 (meeting of 4 November), its September decision published on 24 September 2026 (meeting of 23 September) and Monetary Policy Report 3/2026 of the same date, its list of monetary policy meetings and its daily exchange rates, and Statistics Norway’s consumer price index of 9 October 2026. Differences, changes and comparisons not attributed to a source are The Edge’s calculations.

Sources: Norges Bank, Statistics Norway, Sveriges Riksbank, The Edge.

Get Complimentary Insights

Follow us