MNI NORGES WATCH: Holds In Jan, Still In No Hurry To Cut

The Norges Bank unanimously held its policy rate at 4.0% on Thursday, and Governor Ida Wolden Bache said she was "not in a hurry to reduce the policy rate further" with the focus on above-target inflation.

"The job of tackling inflation has not been fully completed, and if the policy rate is lowered too quickly, inflation could remain above target for too long," Wolden Bache told a press conference following the decision.

There have bene no new forecasts since the December Monetary Policy Report, which contained a rate path indicating one or two cuts over the course of 2026. The Committee’s assessment on Thursday noted that this path is the same as that implied by current market pricing.

"The Committee's current assessment is that the interest rate outlook has not changed materially since December," it said, even as "the current geopolitical situation is tense and is causing uncertainty, including about the economic outlook," Wolden Bache said.

The Committee said in its policy assessment that it  "gave special attention to the fact that inflation is above target and that underlying inflation has been close to 3% for some time," adding that "a restrictive monetary policy is still needed."

LABOUR MARKET DATA

Although the January decision does not come alongside new forecasts, data released since the Dec 18 announcement show that economic activity among Norway's "trading partners increased somewhat more in 2025 than projected in the December Report."

Labour market data published since the Dec 18 meeting "points in slightly different directions," Wolden Bache said. "Registered unemployment has declined a bit and been slightly lower than projected in December, while employment growth appears to be a little weaker than projected." (See MNI INTERVIEW: Norges Bank Head Tilts Against Precise Guidance)

The number of new job vacancies declined somewhat through the second half of last year.

If labour market conditions weaken more than expected, "the policy rate may be lowered faster than envisaged in December," Norges Bank's policy committee stated.