DNB’s chief economist Kjersti Haugland now warns the central bank. She fears that too strong an interest rate medicine will send the economy into an unnecessary downturn. – I both hope and believe that Norges Bank will keep a cool head and increase the interest rate by 0.25 percentage points. If they pull too hard, we can get an unnecessarily sharp slowdown that can create a downturn in the Norwegian economy, says chief economist Kjersti Haugland. In both the USA and Switzerland, the key policy rate has been raised sharply over the past week, for fear that inflation will spiral out of control. She points out that the interest rate hikes from the central bank have a rapid effect on households’ wallets, because almost everyone has loans with floating interest rates. During both the financial crisis and the pandemic, the central bank has lowered interest rates corresponding to several normal interest rate jumps. We have to go all the way back to the summer of 2002 to find the last time when Norges Bank raised the key interest rate by more than 0.25 percentage points at one and the same interest rate meeting. On Sunday afternoon, 10 economists had responded to a survey from the news agency Bloomberg. 8 out of 10 economists expect Norges Bank to raise its key interest rate by 0.25 percentage points on Thursday this week. 2 out of 10 believe in a double interest rate jump. Statistics Norway also forecasts a jump in the key policy rate of 0.5 percentage points. – There is no reason to come up with any more shock medicine to overcome inflation, we are not in that situation, says Haugland, and refers to the USA. DNB now expects increases at each interest rate meeting until March next year, and another in June, with a key interest rate of 2.75 at the end of June 2023. If the forecast turns out to be correct, it could mean a mortgage interest rate of 4.25 per cent next summer. . – It is now boiling in the economy, it is now we need a warning that interest rates will rise, says chief economist Elisabeth Holvik in the Sparebank1 group. Photo: SpareBank 1 However, Elisabeth Holvik, chief economist at Sparebank1-Gruppen, believes that it is urgent for Norges Bank to raise interest rates sharply already now. She believes the central bank should raise interest rates by at least 0.5 percentage points this week, especially due to a heated labor market. – So much is happening in a short time, and it is boiling a bit in the Norwegian economy, especially in the labor market. If you raise a little a lot now, maybe you don’t have to take in so much later, says Holvik. – Interest rate hikes were sensible when the Norwegian economy and inflation were credit-driven, but it is not today. Today, credit growth is very low, says Jan Andreassen, chief economist in the Eika group. Photo: Johan B. Sættem Photo: Johan B. Sættem – I think at least that they must raise interest rates by 0.5 percentage points. This is because it takes time for an interest rate change to have an effect on the economy. The risk is that if you go too slowly, you may have to take in too hard at a later time, she says. Jan Ludvig Andreassen in the Eika group believes that Norges Bank should keep interest rates calm now, but believes that interest rates will be raised by a “quarter”. At the interest rate meeting now before the summer, Norges Bank really has no reason to raise interest rates. But they will probably raise by a quarter of a percentage point, he says. – We have some new problems that old medicines work poorly on. It’s almost like taking a flu vaccine against corona. Today’s challenges are related to lack of labor immigration and lack of deliveries. The lack of input factors is not even helped by raising interest rates, he says.
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– No need for Norges Bank to create a downturn in the Norwegian economy – news Norway – Overview of news from different parts of the country
