Norges Bank reduced its policy rate by 25 basis points to 4.00% on 18 September 2025, following a meeting of its Monetary Policy and Financial Stability Committee on 17 September. The new rate applies from 19 September 2025.
The cut was the bank's second of the year, after a reduction to 4.25% in June. Governor Ida Wolden Bache said: “The job of bringing inflation back to target has not been completed, but a cautious easing of monetary policy will pave the way for returning inflation to target without restraining the economy more than needed.”
INFLATION STILL ABOVE TARGET
Consumer price inflation was 3.5% in August, while inflation adjusted for tax changes and excluding energy products (CPI-ATE) was 3.1%. The Committee said inflation had come down but remained above the 2% target and would stay elevated for a little longer, noting that underlying inflationary pressures were slightly stronger than expected.
Growth in the mainland economy picked up more than expected, with business and housing investment rising substantially. The Committee said the economy appeared somewhat stronger in 2025 than previously projected and that capacity utilisation was higher than previously assumed.
HIGHER RATE PATH
Norges Bank judged that a somewhat higher policy rate would likely be needed in the period ahead than it had projected in June. It said that if the economy evolves broadly as projected, the policy rate will be reduced further in the course of the coming year.
The updated forecast shows the policy rate declining gradually to somewhat above 3% towards the end of 2028.