Statistics Norway (SSB) has now changed its forecasts and no longer expects an interest rate cut in 2024. According to their new report, which was presented on Friday, the first interest rate cut will probably come next year. – It is good news for the Norwegian economy and Norwegian consumers that SSB is bringing today, says Chief Executive Officer of Sparebank 1, Kyrre Knudsen. Estimates interest rate cuts in 2025 In the June forecast, Statistics Norway believed that Norges Bank would start cutting interest rates in December. But in recent weeks these forecasts have been challenged, with March next year now seen as a more likely time for a rate cut. Statistics Norway has changed its mind over the past three months, and points to the weak krone as the main reason. – Norges Bank will probably try to avoid further weakening of the krone. The central bank will probably wait with the interest rate cuts until other central banks have cut their interest rates significantly. The recent weakening of the krone means that the key interest rate will only be cut from the beginning of next year, says head of research Thomas von Brasch at SSB in a press release. Chief economist Kyrre Knudsen at Sparebank 1. Photo: Sparebank 1 Inflation continues to fall, but at a slower pace than before, largely due to the exchange rate of the krone. Statistics Norway believes this means that inflation will still be above the inflation target of two per cent. – Now with a somewhat weaker krone exchange rate, which will lift inflation a little more than what has been in the forecasts, Statistics Norway expects the cut in March next year. And that is in line with believing that Norges Bank will now have to wait until after the New Year, says Knudsen. The krone exchange rate has weakened by five percent since the last interest rate meeting. According to Knudsen, this is the main reason why Norges Bank will not signal faster retrenchment. Check what it costs Select a currency: From Danish kroner To Norwegian kroner 159.93 Exchange rates from Norges Bank. Latest rate from 12.09.2024 Best wage growth in ten years Statistics Norway now expects the highest real wage growth in over ten years, with 1.9 per cent for this year, and around 1.5 per cent in the coming years. – After a few years where inflation has eaten up a lot and almost all of the wage growth, you will get the highest wage growth in ten years this year, says Knudsen. Statistics Norway also believes that the level of activity in the Norwegian economy will finally increase from an abnormally low level. Unemployment has also increased from a low level and is now approaching the average from the 2010s. – Now the arrows are pointing upwards in many areas. Activity in the Norwegian economy will probably increase as a result of increased real wage growth, high activity in the public sector, as well as an increase in housing investment, says von Brasch. Norges Bank published its regional network report on Thursday, which measures the mood among Norwegian companies. The report shows prospects for slightly weaker growth, but still increased investment and employment. It also points out increased differences between different industries. Think housing investment is increasing The repeated interest rate increases from Norges Bank in recent years have had a significant negative effect on housing investment. In the fourth quarter of last year, housing investment was 21 per cent lower than the previous year. Statistics Norway expects that this decline will soon turn into an increase. – The latest figures for sales of new homes and a clear increase in house prices indicate that we are now at a turning point for housing investment, says von Brasch. The new forecasts from Statistics Norway predict that the downturn in the housing industry will soon reverse. Photo: Tor Erik Schrøder / NTB In June this year, 30 per cent more homes were sold than in the same month the previous year, according to the Housing Manufacturers’ Association. – Investments in housing go from sharply in the red both last year and this year, to quite well in the plus next year. And especially from 2026, we will see a significant turnaround in housing investments. So we are now gradually approaching the bottom in the residential approach, says Knudsen. Statistics Norway expects that the prices of used homes will increase by 2.5 to 3.8 per cent in 2024 and 2025, while they expect an overall growth of 8 per cent for 2026 and 2027. Published 13/09/2024, at 09.07
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Expecting the highest real wage growth in over ten years – news Norway – Overview of news from different parts of the country
