Interest Rate Cut in Norway? Norges Bank Governor: Don't Make Any Promises

The statement was not included in the official transcript of the speech. According to Norges Bank, it was planned and meant to be humorous. The backdrop is an ongoing debate about the Labour Party’s election promises regarding rate cuts. At the same time, January inflation turned out higher than expected.

“The past few years have reminded us that outlooks can change quickly. That’s why we make no promises regarding interest rates,” Bache said. She then added that her “friendly advice” to politicians is that they should do the same. The audience responded with laughter. This sentence was not in the official speech transcript.

Norges Bank’s Director of Communications, Bård Ove Molberg, stated that the remarks were planned. He emphasized to E24 that they were not a key message of the address and were delivered with a wink. The Ministry of Finance and the Prime Minister’s Office were informed of the speech’s content beforehand.

When asked if this was criticism of the Labour Party’s campaign, the bank replied that the advice applied to all politicians. It was pointed out that economic conditions have changed rapidly in recent years. That’s why, as emphasized, Norges Bank does not make promises about rates. Bache applied the same principle to the political class.

No signals of possible rate cuts were given in the annual address. Bache emphasized that the bank will ensure inflation returns to 2 percent in the long term. Currently, price growth exceeds 3 percent. Norges Bank sets rates based on the inflation target and the labor market situation.

After higher-than-expected inflation data in January, Norway’s largest banks have withdrawn forecasts predicting rate cuts this year. In December, Norges Bank signaled the possibility of 1–2 cuts in 2026. Now, some market observers even consider a rate hike scenario. The main tool to fight inflation remains raising interest rates.

The next rate decision will be made on March 26. On that day, the bank will also publish new forecasts for the coming months. The debate about the direction of monetary policy is taking place alongside disputes over previous election promises.

During the autumn campaign, the Labour Party promoted the slogan “Rate cuts for everyone – or tax cuts for the few?” On its website, it pointed out that a 0.5 percentage point cut would reduce annual loan costs by NOK 15,000 for a loan of four million kroner.

Norges Bank cut the rate by 0.25 percentage points to 4.0 percent right after the September elections. Since then, there have been no further changes, and Prime Minister Jonas Gahr Støre has maintained that the campaign was an expression of economic responsibility aimed at creating conditions for rate reductions.