“The policy rate will likely be reduced in March,” says Governor Ida Wolden Bache.

Since autumn 2021, Norges Bank has raised the policy rate significantly to tackle high inflation, and 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 moved closer to target, but the rapid rise in business costs is likely to contribute to stoking inflation ahead.

Since the December 2024 Monetary Policy Report, underlying consumer price inflation and unemployment have been broadly as projected. Overall consumer price inflation has been lower than expected. On the other hand, fewer policy rate cuts abroad are now expected than earlier. The Committee’s assessment is that a restrictive monetary policy is still needed to stabilise inflation around target, but that the time to begin easing monetary policy is soon approaching.

There is substantial uncertainty about the outlook for both the global and Norwegian economy. The Committee was concerned with the risk of an increase in international trade barriers. Higher tariffs will likely dampen global growth, but the implications for price prospects in Norway are uncertain.

The Committee will have received more information about economic developments ahead of its next monetary policy meeting in March, when new forecasts will be presented.

New forecasts have not been prepared for this monetary policy meeting. Monetary Policy Report 1/25 will be published along with the monetary policy decision on 27 March 2025.