Since the June 2023 Monetary Policy Report, overall economic developments have been broadly in line with expectations. Activity in the Norwegian economy remains high, and the labour market is tight. At the same time, the policy rate is having a tightening effect, and pressures in the economy are easing. Consumer price inflation has edged down but remains high and markedly above the target. Underlying inflation has remained elevated. The Committee assesses that a somewhat higher policy rate is needed to bring inflation back to target.

“The future policy rate path will depend on economic developments. If the economy evolves as currently anticipated, the policy rate will be raised further in September”, says Governor Ida Wolden Bache.

If the krone proves to be weaker than previously projected or pressures in the economy persist, a higher policy rate than signalled in June may be needed to bring down inflation. If there is a more pronounced slowdown in the Norwegian economy or inflation declines more rapidly, the policy rate may be lower than envisaged in June.