Norway raises interest rate to 4.5 per cent
Norges Bank raised its policy rate for the second time this year because of persistently high inflation.
Norway’s central bank has raised its policy rate by 0.25 percentage points to 4.5 per cent. Norges Bank says inflation remains too high and expects interest rates to remain high for some time.
The rate rise followed the decision by the Monetary Policy Committee on 23 September and was published on Thursday 24 September. According to Norges Bank, all committee members supported the quarter-point increase.
It is the second increase in Norway’s policy rate in 2026. In May, the rate rose from 4 to 4.25 per cent. In August, the rate remained unchanged at 4.25 per cent after inflation that summer had been lower than the central bank had previously expected.
Norges Bank nevertheless considers price growth too high. The bank points to the sharp rise in business costs in recent years. As a result, inflation may remain high for longer, and households and businesses may adjust their expectations to permanently higher prices. According to the bank, this makes it more difficult to bring inflation back down later.
The central bank does not want to slow the economy more than necessary. In its new projections, the rate therefore remains close to its current level at first. It then falls gradually according to Norges Bank’s projected path. Inflation is expected to reach around the 2 per cent target in 2029. Recorded unemployment is expected to be slightly above its pre-pandemic level.
The decision affects borrowing costs in Norway, although a policy rate does not automatically translate one-for-one into all mortgage, business or savings rates. For banks, businesses and households, the decision does mean that the central bank does not expect financing to become cheaper quickly.
Norges Bank is keeping room to move in either direction. If inflation remains high for longer or external price pressures intensify, a further increase may be needed. If inflation falls faster or the labour market clearly weakens, the rate could be lower than currently projected, according to the bank. The next rate decision is scheduled for 5 November.
One story, several perspectives
What is established
- Norges Bank raised its policy rate to 4.5 per cent.
- The bank cites inflation above target and high business costs as reasons.
- The bank expects the economy to cool and unemployment to rise slightly.
Left
Arguments A higher interest rate mainly affects tenants, first-time buyers and households with limited financial buffers. Tackling inflation should therefore be supplemented with measures against price increases and protection of incomes, rather than relying mainly on curbing demand.
Values Purchasing power, social protection, employment and the distribution of burdens.
Consequences Persistently high interest rates can slow investment and housebuilding and increase inequality. Too little tightening, on the other hand, could allow price growth to continue for longer.
Centre
Arguments An independent central bank must safeguard price stability without unnecessarily damaging the economy. A limited increase, with scope to adjust later, is appropriate given uncertainty about inflation and the labour market.
Values Monetary stability, independent governance, predictability and balance.
Consequences A moderate course can stabilise inflation expectations without triggering a deep recession, but only if the bank responds to new data in good time.
Right
Arguments Persistent inflation erodes everyone’s savings and purchasing power. The central bank must therefore remain credibly tough and prevent businesses and workers from building structurally higher prices and wages into the system.
Values Stability of the value of money, fiscal discipline, responsibility and trust in institutions.
Consequences A higher interest rate can cause pain in the short term, but this approach holds that it prevents inflation from becoming entrenched and requiring a harsher intervention later.
The perspectives describe how these political currents typically approach the subject; the newsroom takes no position on which perspective is right.
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The central bank confirms the rate increase and the underlying reasoning. The text clearly distinguishes between the official interest-rate path and possible consequences that are not automatic.
- confirmed Norges Bank raised its policy rate to 4.5 per cent on 23 September. — This is stated in the Monetary Policy Committee’s decision. source
- confirmed The rate was raised for the second time in 2026. — The rate rose to 4.25 per cent in May and to 4.5 per cent in September; in August it remained unchanged. source
- confirmed Norges Bank expects inflation to move towards 2 per cent in 2029. — This is stated in the central bank’s outlook. source
Editor's note
The interest rate, the two increases in 2026, the inflationary reason and the projections come from Norges Bank. The precise effects on individual mortgage and savings rates cannot be inferred from these sources.Sources
- Policy rate raised to 4.50% — Norges Bank
- Rate decision September 2026 — Norges Bank
- Policy rate raised to 4.25 percent — Norges Bank
- Rate decision August 2026 — Norges Bank
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