Norges Bank raises key interest rate to 4.25 percent amid political backlash

Norges Bank increased its key policy rate by 0.25 percentage points to 4.25 percent on Thursday, triggering sharp criticism from opposition politicians who argue the move will worsen financial strain on households and businesses.

Hans Andreas Limi, deputy leader of the Progress Party and finance spokesperson, called the hike a “rate bluff” by the government. “During the election campaign, the Labour Party promised ‘rate cuts for all.’ Now we see the result,” he said, claiming the government could have eased pressure on the central bank by cutting taxes and halving the VAT on food, as his party has proposed.

Limi pointed to Sweden, where tax reductions have helped lower inflation—particularly food prices after a VAT cut and reduced fuel costs. “This shows that measures proposed by the Progress Party would have had a positive effect, but unfortunately, the government resists,” he added.

Finance Minister Jens Stoltenberg (Labour) cited increased uncertainty due to the conflict in the Middle East, a factor Norges Bank also highlighted in its decision. “Price growth remains above target. In uncertain times, it is crucial to maintain responsible economic policy, prioritising what matters most for people’s everyday finances,” Stoltenberg stated.

Marthe Hammer, finance spokesperson for the Socialist Left Party, warned the rate hike could deepen financial struggles. “I fear this is the wrong medicine. It risks making things worse for many already struggling with daily expenses,” she said, noting that families with high mortgages and a crisis-hit construction sector would bear the brunt. She called for an urgent debate on how monetary policy addresses imported inflation and its impact on households, hospitals, and municipalities.

Ingrid Liland, deputy leader of the Green Party, acknowledged that Norges Bank was acting within its mandate but criticised the timing. “What’s sickening is that ordinary people must tighten their belts the same week Norway’s continental shelf sees an investment boom—something the government is entirely unwilling to address,” she said, adding that such investments directly drive up costs.