Norges Bank Holds Key Interest Rate, Signals Readiness to Tighten — Update

By Ed Frankl

Norway's central bank held its key interest rate Thursday, but kept open the possibility of further policy tightening should inflation remain high.

Norges Bank held its key rate at 4.5% as expected by investors, having raised it by a quarter-point in its last meeting in September. Policymakers said "restrictive monetary policy is still needed to bring inflation down to target within a reasonable time horizon."

"Inflation is too high. It will likely be necessary to keep the policy rate elevated for a time, and we are prepared to raise the policy rate if needed," Gov. Ida Wolden Bache said.

The decision to hold the key rate came a week after the European Central Bank also stood pat. Like the ECB, Norges Bank has raised rates twice since the start of the war in the Middle East that led energy prices to surge.

Prior to the announcement, investors had expected rates to remain at their current level until at least the end of next year, according to LSEG data.

Policymakers continue to balance persistently high inflation, which at 3.4% in September had been above Norges Bank's 2% target since 2020, and a cooling economy.

Rapid rises in business costs in recent years will likely keep inflation elevated ahead, policymakers said. However, they noted they did not "want to restrict the economy more than needed."

On Wednesday, Sweden's Riksbank raised its key rate by a quarter-point for the first time in more than three years. The Bank of England is also expected by investors to increase its key rate later Thursday.

Norway is less exposed than economies like the eurozone to swings in energy prices on international markets, generating a majority of its electricity from hydropower and other renewable sources.

Core inflation, which strips out energy costs and taxes, held at 3% in September, having been above 2% for more than four years.

The Norwegian krone has also climbed versus the euro since July, bringing down the costs of imported goods, though weakening the competitiveness of Norway's exports.

Write to Ed Frankl at edward.frankl@wsj.com

(END) Dow Jones Newswires

November 05, 2026 04:36 ET (09:36 GMT)