FX.co ★ Norges Bank Holds Rates at 4%

In its initial meeting of 2026, Norges Bank opted to maintain its policy rate at 4%, a decision that aligned with market expectations. While acknowledging the significant uncertainty facing the economy, the bank signaled the possibility of rate reductions later in the year if economic conditions align with their projections. Officials underscored the necessity of retaining a restrictive monetary policy, as inflation levels persist above target. They warned against prematurely loosening policy, which could result in prolonged elevated inflation. Conversely, the bank highlighted the risks of maintaining an excessively tight policy for too long, which could unnecessarily hinder economic activity and suppress growth beyond what is needed to return inflation to target levels. Norges Bank reiterated its December forecast, hinting at one to two rate cuts in 2026, despite ongoing geopolitical uncertainties. Nonetheless, policymakers stressed that their decisions would remain guided by economic data, leaving the door open for potential rate adjustments, both decreases and increases, dependent on future economic and inflationary trends.