Norges Bank's Monetary Policy and Financial Stability Committee decided to keep the policy rate unchanged at 4.5 percent at its meeting on 2 May.

"Based on the Committee's current assessment of the outlook, the policy rate will likely be kept at today's level for some time ahead," says Governor Ida Wolden Bache.

The Committee assesses that the policy rate is sufficiently high to return inflation to target within a reasonable time horizon. Monetary policy is having a tightening effect, and growth in the Norwegian economy is low. Price inflation is slowing but is still markedly above target. Business costs have increased sharply in recent years, and high wage growth and a weaker krone are contributing to keeping inflation elevated.

Since the March Report, inflation has been slightly lower than projected. On the other hand, economic activity is slightly higher than expected, and wage growth may turn out to be slightly higher than projected. At the same time, interest rate expectations abroad have risen, and the krone is somewhat weaker than assumed. The Committee will have received more information about economic developments ahead of its next monetary policy meeting in June, when new forecasts will be presented. The data so far could suggest that a tight monetary policy stance may be needed for somewhat longer than previously envisaged.

The economic outlook is uncertain. If a further increase in the policy rate is judged necessary to bring inflation down to target within a reasonable time horizon, the Committee is prepared to raise the policy rate again. If there is a more pronounced slowdown in the Norwegian economy or prospects suggest that inflation will return to target faster, the policy rate may be lowered earlier than envisaged in March.

New forecasts have not been prepared for this monetary policy meeting. Monetary Policy Report 2/24 will be published along with the monetary policy decision on 20 June 2024.

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