Norway economy: Purchasing power to rise despite high interest rates

Statistics Norway (SSB) forecasts that Norwegian household purchasing power will continue to increase for a third consecutive year, despite high interest rates. While wage growth has slowed, SSB estimates an annual wage increase of 4.3 percent in 2026. With inflation near 3 percent, real wages are expected to rise, which may eventually drive a broader increase in consumption.

Regarding monetary policy, Norges Bank is expected to raise the policy rate by an additional 0.25 percentage points this autumn due to inflation remaining above the 2 percent target. Following this, four rate cuts are projected through 2027 and 2028 as inflation approaches the target, potentially bringing the rate down to 3.5 percent.

In the housing sector, residential investments remain low following a significant decline in 2023 and 2024. High construction costs, weak sales of new homes, and sustained high interest rates are expected to keep investment levels stagnant through the current and upcoming year.