Norway raised its policy interest rate from 4.25% to 4.50% on September 24, while Sweden kept its rate at 1.75% but signaled increases could begin before the end of 2026. The two central banks said persistent price pressure and the energy shock linked to the Middle East war require vigilance, according to their policy statements. Their decisions add to a wider shift toward tighter monetary policy.
Both banks aim to keep inflation near 2%. Norges Bank said Norwegian inflation has exceeded that target for several years. Governor Ida Wolden Bache said August consumer prices were 3.3% higher than a year earlier, while a measure excluding energy and adjusted for tax changes rose 3.0%. Sweden's Riksbank said its measured inflation is low partly because of temporary fiscal measures; after their direct effects are removed, underlying inflation is relatively close to 2%.
Norges Bank said higher oil, gas and other commodity prices since June could raise costs for domestic firms and imported goods. A stronger Norwegian krone should temper some imported inflation, it said. The bank also noted that economic capacity has eased and employers report fewer recruitment difficulties, even though unemployment has changed little. It judged that a quarter-point increase was needed to return inflation to target without restraining activity more than necessary.
Sweden's Riksbank said second-quarter GDP grew faster than expected and the recovery appears broad. It warned that a weaker krona and recent rises in oil, electricity and fuel prices could lift inflation. The bank left rates unchanged because spare capacity remains and its adjusted inflation measure is near target. It now expects to raise rates more than projected in June if its outlook holds, with increases starting this year.
Reuters described the Nordic decisions as part of a wider response to war-related energy costs. It reported that the US Federal Reserve, European Central Bank and Bank of Japan also raised rates in September, while the Swiss National Bank held its rate at zero. Higher policy rates generally increase financing costs for households and companies; the banks are weighing that pressure against the risk that an energy shock spreads into broader prices.
Norges Bank said its rate may stay near the current level for some time and that another increase remains possible. It projects inflation will fall to 2% in 2029 and plans its next decision for November 5. Sweden's next decision is due November 4. Its Riksbank said any increase this year depends on inflation and economic activity evolving as forecast, leaving the pace of tightening open to new data.
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