Norway’s central bank raised its policy rate by 0.25 percentage points to 4.50% on Thursday and said another hike is possible if the inflation outlook warrants it. Core consumer prices rose 3% year-on-year in August, above the bank’s roughly 2% target.
The bank said a somewhat tighter monetary stance was needed to return inflation to target within a reasonable time, while avoiding more restraint than necessary. Nordea Markets said the new rate path suggested a 40% chance of another increase within six months.
Norges Bank projects inflation will fall to 2% in 2029; core inflation is forecast at 2.7% in 2027, 2.4% in 2028 and 2.1% in 2029. It projects mainland GDP growth, excluding oil and gas production, of 0.9% in 2026 and 1% in each of the next two years. Registered unemployment is expected to edge slightly above pre-pandemic levels.
