Norway Braces for Rising Borrowing Costs, Says DNB Carnegie Economist
As widely anticipated, Norges Bank maintained its key interest rate at 4.0 percent, but signaled a potential increase later this year. This warning comes amid concerns about persistent inflation and a need to maintain price stability, according to Kjersti Haugland, Chief Economist at DNB Carnegie.
“This is a clear signal from Norges Bank. They are not acting yet, but one must expect interest rates to rise during the year,” Haugland stated.
DNB Carnegie Adjusts Interest Rate Forecast
Following the central bank’s decision, DNB Carnegie revised its interest rate forecast, now anticipating two rate hikes in 2026 – one in June and another in September. The brokerage also projects two rate cuts in 2027, slated for September and December.
Haugland emphasized the forecast is subject to change, noting a potential for two increases as early as May and June if inflationary pressures unexpectedly surge. This potential shift is linked to the performance of the Norwegian krone, with a weaker krone potentially fueling inflation.
Analyst Perspectives
Karine Alsvik Nelson, Senior Economist at Handelsbanken, indicated that the market has already priced in one rate hike for the year, suggesting a roughly 50/50 probability of a second increase. She believes raising interest rates is a prudent step towards controlling inflation in a relatively stable Norwegian economy.
Dane Cekov, interest rate and currency strategist at SB1 Markets, highlighted the significant upward adjustment to the interest rate path, suggesting the primary question now is the extent of future rate increases, rather than whether they will occur at all. He also pointed to the potential impact of geopolitical events, particularly in the Middle East, on inflation and the trajectory of interest rates.
This article is based on reporting from E24 as of March 26, 2026.