Norwegian Central Bank Holds Rates Steady Amid Economic Uncertainty

Norway’s central bank has decided to keep its key policy rate unchanged at 4.5 percent, maintaining a cautious stance in response to ongoing economic uncertainty both at home and abroad.

The decision follows a year of holding rates steady after a rapid series of increases aimed at countering inflation, which surged in recent years. While inflation has eased significantly from its peak, it remains above the official 2 percent target, pushed by rising food and service prices, a weaker krone, and persistent wage growth. At the same time, the Norwegian economy’s activity levels have been broadly as expected, with high employment and stable unemployment, although both remain closely watched figures. Global factors are adding to the complexity, as trade tensions have escalated—with the US raising tariffs on Norwegian goods and broader international trade barriers impacting growth prospects. Oil and gas prices, key for Norway’s economy, have also declined.

The central bank emphasized that a restrictive monetary policy is still necessary to ensure inflation returns to target levels without risking excessive tightening that could undermine economic growth. While there is speculation that rates could be reduced later in 2025, the outlook remains uncertain and will depend on further economic data and policy developments globally and domestically.

This measured approach signals Norges Bank’s commitment to balancing inflation control with economic stability during a period marked by significant external and internal challenges.