Key Takeaways
- Norges Bank kept the policy rate at 4.00% at its final meeting of the year, as widely expected.
- Norway’s central bank reiterated that it is not in a hurry to cut rates.
- Analysts expect the next rate cut to come in mid-2026, bringing the policy rate to 3.50% by next year-end.
At its final meeting of the year, Norges Bank kept its policy rate unchanged at 4.00% after two rate cuts earlier this year. Norway’s central bank said that restrictive monetary policy was still needed to tackle inflation running at 3%.
“The krone exchange rate has depreciated since the September report and contributes to raising inflation prospects somewhat going forward. If the policy rate is lowered too quickly, inflation could remain above target for too long,” Norges Bank said.
What Are the Key Norges Bank Interest Rates?
- Policy rate: 4%
- Overnight lending rate: 5%
- Reserve rate: 3%
Will Norges Bank Cut Interest Rates in 2026?
Here are the first key interest rate decision dates for 2026:
- Jan. 22
- March 26
- May 7
- June 18
While inflation remains elevated, Norges Bank notes that there appears to be slightly more spare capacity in the economy than projected in the September report. As a result, the central bank made a small downward revision to the near-term rate path.
“The committee does not want to restrain the economy more than needed to bring inflation down to target,” Norges Bank said, adding that it is appropriate to keep the policy rate unchanged at this meeting but that it “still envisages a cautious normalization of the policy rate in the coming years.”
Norges Bank now signals that rates will remain on hold through the first quarter, effectively ruling out a March cut for the time being. It sees roughly a 50/50 probability of a first cut in June, with a cut fully signaled for September. The central bank then indicates another 50/50 probability of a further reduction before the end of 2026.
“Relative to our expectations, this was a slightly more hawkish downward adjustment to the rate path. We had anticipated a stronger signal for a June cut, around an 80% probability, followed by a fully priced cut in September,” says Karine Alsvik Nelson, macroeconomist at Handelsbanken.
“Norges Bank’s policy rate decomposition also shows that the factors influencing the revision were broadly as we expected: Weaker domestic demand was the main driver behind the lower path, coupled with somewhat softer wage and price pressures. On the other hand, a weaker krone limited the decline in the path, alongside upward revisions to expected international policy rates,” she adds.
Investment bank SEB said the Norges Bank messaging was skewed to the hawkish side, but reiterated its view that wage growth developments will be decisive and therefore sticks with its call for a June cut.
