Bache flags further rate increases after rise to 4.25 percent
Norway raised its policy rate to 4.25 percent in May, Ida Wolden Bache told a June 26, 2026 panel. The Bank for International Settlements (BIS) published the discussion on October 19, covering supply shocks, expectations and communication.
Oil shocks divide policy responses
Central Bank of Norway Governor Ida Wolden Bache said the May increase from 4.00 to 4.25 percent reflected persistent above-target inflation and rising price pressures.
She indicated further increases would probably be necessary.
Higher oil prices support Norwegian petroleum investment and wages, strengthening the case for tightening against second-round effects.
Central Bank of the Republic of Türkiye Governor Fatih Karahan reported that direct business engagement in 2025 lowered consumer and producer price expectations by roughly 1 and 1.2 percentage points respectively.
Video outperformed text in an experiment using the November 2025 Inflation Report's forecast of 13–19 percent inflation at end-2026.
Public understanding remains thin
Reserve Bank of New Zealand Governor Anna Breman said fewer than 25 percent of respondents in 2026 identified inflation or interest rates as its responsibility.
Only 30 percent identified its target range in 2022, despite inflation targeting dating to 1989.
Evidence that communication directly changes expectations remains mixed.
Bank of Canada Governor Tiff Macklem said its five-year framework renewal, due by end-2026, would retain the 2 percent target while reviewing responses to supply shocks, models, scenarios and communication.
Communication cannot replace action
Breman stressed that communication cannot substitute for tightening when inflation requires it.
Macklem said monetary policy cannot reverse tariff-related efficiency losses.
Bache's account shows why the same energy shock demands different responses in producing and importing economies.