“The policy rate will most likely be kept at 4.5 percent to the end of 2024,” says Governor Ida Wolden Bache.

In recent years, the policy rate has been raised significantly to bring down inflation. Since December 2023, the policy rate has been held at 4.5 percent. The interest rate has contributed to cooling down the Norwegian economy and to dampening inflation. Unemployment has edged up from a low level. Inflation has declined markedly, but the krone depreciation in recent years and the rapid rise in business costs are likely to restrain further disinflation.

The Committee judges that a restrictive monetary policy is still needed to bring inflation down to target within a reasonable time horizon. The forecasts presented in the September Report indicated a gradual reduction in the policy rate from the first quarter of 2025. The outlook for the Norwegian economy does not appear to have changed materially since the previous monetary policy meeting. In its discussions up to this monetary policy meeting, the Committee gave weight to the fact that inflation has slowed faster than expected over the past year and that it was also lower in September than projected. On the other hand, international policy rate expectations have increased, and the krone has been a little weaker than assumed.

There is uncertainty about future developments in the Norwegian economy. The Committee will have received more information about developments ahead of its next monetary policy meeting in December, when new forecasts will be presented.

New forecasts have not been prepared for this monetary policy meeting. Monetary Policy Report 4/24 will be published along with the monetary policy decision on 19 December 2024.