Inflation in the United States slowed yesterday to the lowest level since 2021. The consumer price index (CPI) was at 3.0 percent compared to the same month last year, and was slightly lower than analysts expected. In May, the US CPI was 4.0 per cent. – Both total and core inflation, which excludes components such as food and energy goods, show a greater decline in annual growth than was expected, says chief economist at Handelsbanken, Marius Gonsholt Hov. Hov explains that a new interest rate increase from the US central bank is still expected in July, but that the interest rate peak may soon be reached for the world’s largest economy. – We expect a new interest rate increase from the American central bank in July, but an increase on top of that again is now greatly reduced. We may have seriously reached the interest rate peak in the US, says Hov. The US price increase moderates more than expected in June. The probability of a new interest rate hike after July should be reduced, according to the chief economist. Photo: AFP – Good news for all countries Due to its size and international connections, developments in the US economy have major effects around the world. They account for almost a quarter of global GDP, a fifth of global FDI, and more than a third of stock market capitalization. It is the main export destination for a fifth of countries around the world, and the US dollar is the most widely used currency in global trade and financial transactions. GOOD NEWS: Chief economist at Sparebank1 Markets, Harald Magnus Andreassen, says that lower inflation in the US is good news for inflation in Norway. Photo: CF-WESENBERG – It is good news for all countries in the world that inflation in the USA is coming down, says chief economist at Sparebank1 Markets, Harald Magnus Andreassen. He points out that inflation in the world is still high, but that “lower inflation abroad is good news for inflation in Norway”. – This means that Norges Bank does not need to raise interest rates as much as they would otherwise do, says Andreassen. Increased policy rate and stronger krone In June, Norges Bank raised the policy rate by 0.5 percentage points, to 3.75 per cent. The governor of the central bank then imagined that the interest rate could rise to 4.25 per cent later in the autumn. STRONG KRONE: Senior economist at Nordea Markeds, Dane Cekov says that a stronger krone can in the long run mean lower interest rates in Norway. – If this continues, it means that interest rates will rise less than what was in the cards a few weeks ago, says senior economist at Nordea Markeds, Dane Cekov. The economist explains that the dollar has weakened and that the Norwegian krone has strengthened, and that this is good news both for those who are on holiday now and for the Norwegian economy. – A stronger krone means that price pressure in Norway will be less in the long term. And that could in the long run also mean lower interest rates in Norway, says Cekov. Policy rate in percent The policy rate is set eight times a year by Norges Bank. The policy interest rate governs the interest rates in the banks, and affects your housing costs. The aim of raising the interest rate is for the high prices to come down again. The forecast tells us how Norges Bank thinks interest rates will develop in the future. Read more about sources and reservations here. A higher policy rate means increased expenses if you have a mortgage 2021 2022 2023 2024 2025 2026 Forecast Norges bank The economists are still speculating about a new double interest rate increase this August. In other words, an interest rate jump to 4.5 per cent, which is higher than what was expected in June. This is because the Norwegian inflation figures are still strong. – But if we see that the inflation figures for our trading partners continue to come in on the low side of expectations, then there will be a cap on interest rate expectations among the trading partners. And that may have a dampening effect on the further interest rate outlook here at home, says Hov. – Bismak for Norwegian loan customers On Monday, the krone strengthened against the euro, and yesterday the krone was at its strongest against the dollar since April. Just before 17:00 on Thursday, the euro cost NOK 11.18. The dollar cost NOK 9.98. – People in the foreign exchange market have realized that inflation is higher than Norges Bank imagined, says Cekov. The euro has become 50 cents cheaper in the last four days. Which means that Norwegians on holiday abroad suddenly have a little more to worry about. – That is almost 5 per cent in just a few days. So if the krone exchange rate stays where it is now, then the holiday will suddenly be 5 per cent cheaper than what it looked like a few weeks ago, Cekov explains. The economists nevertheless warn against being too optimistic, because there are “enormous fluctuations” in the krone exchange rate. Chief economist at Handelsbanken, Marius Gonsholt Hov believes that the interest rate peak in the US may have been reached. Photo: Handelsbanken Norge – This is complicated here, and it is important to emphasize that although we now see lower inflation among important trading partners, we have seen the opposite here at home, says Hov. The Norwegian inflation figures for June were clearly higher than what both the market and Norges Bank had envisaged. This increased expectations for how high Norges Bank will set the interest rate. – In that case, it means one more interest rate increase beyond what Norges Bank has already announced. The fact that the market foresees that Norges Bank will proceed even more aggressively in the coming months has probably in itself contributed to strengthening the krone, explains Hov. – Then the strengthening of the krone comes with a bit of an aftertaste for a Norwegian loan customer.
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Low inflation figures in the US can be good for the Norwegian economy – news Norway – Overview of news from different parts of the country
