This summer, Norges Bank raised the key interest rate by one full percentage point. Tomorrow, economists expect another sharp jump in interest rates from the central bank. We have not had such a steep rise in interest rates since 1998. At the same time, the level of debt among most people is much higher today – and interest rate increases bite much harder because many people have floating interest rates on their mortgages. Chief economist Jan Ludvig Andreassen in the Eika group now comes with a warning. Because the interest rate jumps from this summer have not yet affected the finances of households. The banks must notify all increases in mortgage interest rates six weeks before they occur. – I think the interest rate hikes are now completely unnecessary. The Norwegian economy is already weakening, and we don’t need to give the economy a pat on the back when it goes downhill, he says. Jan Ludvig Andreassen, chief economist in the Eika group. Photo: Johan B. Sættem Central banks all over the world are struggling with skyrocketing price growth. Interest rate shock in Sweden In Sweden yesterday, the key interest rate was raised more than expected – by a full percentage point. Here at home, most experts expect Norges Bank to raise the key interest rate tomorrow by twice what is considered a normal interest rate change. – There are quite a lot of austerity measures on the way already, the effect of which we have not yet known. There is every reason for Norges Bank to keep calm on Thursday, he says. LO also believes that it is important that the central bank now holds back on the double interest rate jumps. Chief economist Roger Bjørnstad has warned in E24 and DN against coming up with new double interest rate hikes now. Chief economist Roger Bjørnstad in LO. Photo: Johan B. Sættem /news He has no faith that increased prices lead to wages that run wild, and fears that the consequences of the interest rate policy will be that many people lose their jobs. – Now they have to calm down. Inflation is imported and is not due to domestic conditions. We have a wage structure that handles that type of inflation, he says. Professor Steinar Holden at UIO has also warned to E24 and in Dagsnytt 18 against raising interest rates much now – because of the danger of a significant increase in unemployment. Behind this door is the key interest rate, which affects, among other things, the housing interest rate for all Norwegians. Photo: Ørn E. Borgen / NTB – It is sensible for Norges Bank to slow down more Chief Economist Harald Magnus Andreassen at Sparebank1 Markets believes, however, that the central bank must stick to its plan to raise interest rates further. Then the central bank may rather take its foot off the gas pedal in 2023, if the economic development dictates it. The danger is that expectations that everything will be more expensive tomorrow compared to what it costs today become fixed. – It is a bit too early to take a break in interest rate setting now. The reason is quite simple, that if we don’t slow down the economy, there is a danger that the economy will become more stuck, he says. The result can then be a spiral in which prices and wages compete to increase the most. – Experience shows that with unemployment so low and with such a large shortage of labor in the economy, wage growth will eventually pick up, even if that is not the outcome of the negotiations between LO and NHO. Then the price increase will also be higher than 2 per cent. Therefore, it still makes sense for Norges Bank to slow down, he says.
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Believes Norges Bank must slow down the pace of interest rates – news Norway – Overview of news from various parts of the country
