Most economists expected that the central bank would raise interest rates by 0.25 percentage points. Norges Bank is under pressure after the krone has become far weaker than expected. The weak krone points in the direction that goods from abroad will become more expensive and push inflation upwards. The central bank says that both the weakening of the krone, but also the wage settlement, can contribute to keeping price growth up going forward. – If the krone remains weaker than assumed or the pressure in the economy persists, a higher interest rate than we have previously envisaged may become necessary, says Central Bank Governor Ida Wolden Bache. Sees interest rate peak of 4 per cent The fact that Bache is addressing the crisis-weak krone makes chief economist Kjersti Haugland at DNB Markets expect an even higher interest rate in the future. – I am not exactly getting weaker in the belief that the interest rate peak will end at 4 per cent this autumn, she says to news. – This is a clear hint that Norges Bank will not settle for a permanently weaker krone without reacting with interest rate hikes. Waiting for another interest rate hike in June Inflation in Norway excluding changes in energy and taxes was 6.2 per cent in March, according to Statistics Norway. The objective of the central bank is to keep the value of money stable over time by keeping inflation around 2 percent. The interest rate will probably be raised by a new 0.25 percentage points in June, according to Norges Bank. Haugland believes that the interest rate should also be raised in August and September, so that the interest rate peak hits 4 per cent well before the end of the year. This will result in a mortgage interest rate of over 5 percent. – For all those who have debt, this means that their purchasing power will be less than it would otherwise be. They must therefore slow down their consumption, she says. The central bank justifies the need for a higher interest rate as follows: “The committee’s assessment is that there is a need for a higher interest rate to curb inflation. Price inflation is high and well above the target of 2 per cent. Growth in the Norwegian economy has slowed, but activity is still high. The labor market is tight, and wage growth looks set to be higher than last year.” Since autumn 2021, the key interest rate has been stepped up to cool down the economy.
ttn-69
Sets the interest rate to the highest level in 15 years – news Norway – Overview of news from different parts of the country
