The Norges Bank left its policy rate unchanged at 4% at its first meeting of 2026, as widely expected. While acknowledging elevated uncertainty, the bank said rates could be lowered later in the year if the economy evolves as projected. Policymakers stressed that a restrictive monetary stance is still warranted, as inflation remains above target. They cautioned that easing policy too quickly could allow inflation to stay elevated for an extended period. At the same time, the bank warned that maintaining an overly tight stance for too long could weigh unnecessarily on economic activity and restrain growth more than required to bring inflation back to target. The Norges Bank reaffirmed its December rate forecast, which points to one to two rate cuts in 2026, despite heightened geopolitical uncertainty. However, officials emphasized that policy remains data-dependent and that both rate cuts and hikes remain possible, depending on how the economy and inflation evolve.
