Norges Bank rate decision Hawkish hold

Research evidence excerpt

Norges Bank rate decision Hawkish hold

18 June 2026

Norges Bank rate decision Economics

Hawkish hold Norway

◆ Norges Bank stayed on hold, as widely expected Anja Sabine Heimann

Economist, Germany &

◆ Inflation worries are evident across the whole of the Monetary Policy Report ScandinaviaHSBC Bank plc

anja.sabine.heimann@hsbc.com

◆ The updated rate path signals one hike before year-end and a cut in 2027 +44 7387 247457

Facts

Following the surprise policy rate hike in May, Norges Bank left the policy rate unchanged at 4.25% at its

June meeting. This was in line with market expectations. The decision was unanimous.

The bank indicated that it “will likely be necessary to raise the policy rate further at one of the forthcoming

monetary policy meetings” but stressed uncertainty surrounding the outlook. Concerns about stronger-

than-expected imported inflation were mentioned but it was noted that “external price pressures may prove

weaker than currently assumed” if energy markets normalise quickly following the US-Iran deal. It was

also reiterated that inflation has been above target for a prolonged period, making it appropriate to

respond more forcefully than in a situation where inflation is already close to target.

The new rate path is a higher compared to March and points to more than one full hike by year-end

compared to a peak of 4.35% in the March report, which is fully unwound by Q4 2027 (4.20%, prev.

3.98%). For 2028, one and a half cuts are envisaged and the rate path’s endpoint was lowered to 3.20%

by Q1 2030.

In a new set of projections, the bank has revised down its growth forecasts and now expects the mainland

economy to expand by 0.9% in 2026 (prev. 1.4%) followed by 0.8% (prev. 0.9%) in 2027. Inflation