Norges Bank raises interest rate to 4.5 percent

Norges Bank has raised the policy rate by 0.25 percentage points to 4.5 percent in response to persistent inflation. This move marks a reversal from the rate cuts seen earlier in 2025, returning interest rates to levels seen at the start of that year.

Central Bank Governor Ida Wolden Bache stated that the bank must react with interest rates even when inflation is driven by international factors, such as energy price increases caused by conflicts in the Middle East and Ukraine. While the bank acknowledges that imported cost shocks are harder to influence, it aims to prevent these impulses from triggering broader domestic price increases.

Economists note that while the Norwegian economy has remained resilient with low unemployment, inflation forecasts have worsened, making it difficult to reach target levels. The rate hike is expected to increase financial pressure on households, with some citizens reporting significant increases in monthly mortgage and fuel costs.