After 13 interest rate jumps by the central bank in the course of two years, a large majority of market participants expected that Norges Bank would keep interest rates unchanged at 4.25 per cent in December. Before the interest rate decision was announced, the market expectation that the policy rate would be kept unchanged was 86 per cent. SR-Bank informed news on Thursday morning. But Norges Bank is still sticking to its interest rate plan from September, and is setting the key interest rate by a new 0.25 percentage points. At the same time, the central bank is signaling that the interest rate peak is probably here – unless the krone becomes weaker or prices rise more than the central bank expects. – We see that the economy is cooling down, but the price increase is still too high. An increase in interest rates now reduces the risk of price inflation remaining high for a long time. We will probably keep the policy rate at 4.5 per cent for quite some time to come, says Central Bank Governor Ida Wolden Bache. Immediately after the interest rate decision, the krone strengthened by around 20 øre against the euro. In the foreign exchange market, one euro costs NOK 11.59. – Norges Bank has placed more emphasis on the weak krone than soft macro data, says senior strategist Dane Cekov at Nordea in a comment. He calls the decision from the central bank “hawkish”. – Not the pre-Christmas present one was hoping for – This is very surprising. Most trends, apart from the krone and ongoing inflation, point to an unchanged interest rate. It is obvious that the weak krone has played a decisive role, says chief economist Kyrre Martinius Knudsen at SR-Bank. He believes the central bank has become more difficult to interpret. – This was not the pre-Christmas gift everyone with a mortgage had believed and hoped for, he says. – It has become more demanding to interpret Norges Bank, says chief economist Kyrre Knudsen at SR-Bank. Photo: Ingvild Taranger / news The interest rate differential with the rest of the world is increasing – There was no Christmas present from Norges Bank today, they delivered a jump in interest rates and announced that the peak will be held until the autumn, says chief economist Kjersti Haugland at DNB. While the American central bank and the European central bank have kept their interest rates unchanged, Norges Bank is going against the flow. – By increasing the difference in interest rates against foreign countries, they are now helping to strengthen the krone. It is an important contribution to the fight against inflation, she says. – Surprised and disappointed – This is a rather unpleasant Christmas present for Norwegian households, says managing director Carl O. Geving of the Norwegian Real Estate Association. He says he is surprised and disappointed by the central bank’s decision. – It does not seem that Norges Bank has realized how deep the problems the current interest rate policy creates, and what challenges this will trigger in the years to come. Today’s decision appears to be single-minded and unwise, says Geving. In monetary policy report 4/2023, the central bank expects house prices to increase by 1 per cent during 2024. This is slightly higher than the estimates presented in September. At the same time, housing investment is expected to fall by more than 6 per cent compared to 2023. This is a sharper drop than the estimate in the previous monetary policy report. Signs of a cooling in the economy Expectations that the interest rate peak had been reached were strengthened last week. The companies in Norges Bank’s regional network expected clearly weaker growth prospects and wage prospects than what the central bank has assumed. The central bank published its latest analysis of the economy in the monetary policy report back in September. Interest calculator The calculator uses the formula for annuity loans to calculate your monthly costs. Nominal interest is used here. This means that there will be an additional transaction fee which will vary from bank to bank. Today’s interest rate is taken from DNB’s mortgage interest rate for young people, and different banks will have different interest rates. The figures given here will therefore be approximate for you. Monthly expenses are interest and repayments combined. Read more about sources and reservations here. See how much you have to pay if the interest rate increases. Ahead of the interest rate meeting, Tore Vamraak, chief economist at Sparebanken Sør, said that he considered it almost a matter of chance whether there would be a change in interest rates or not. – The companies’ expectations in the regional network were very negative, and much looks bleak in the economy, said the chief economist, who was previously state secretary in the Ministry of Finance. Norges Bank surprisingly predicts that the interest rate will remain at 4.5 until the autumn. It is more negative than the players in the business world had thought, says Tore Vamraak. He is chief economist at Sparebanken Sør and former state secretary in the Ministry of Finance. Photo: Rune Kongsro / Ministry of Finance – Nevertheless, I believe that it would be wise for Norges Bank to raise the key interest rate, out of consideration for the exchange rate and the inflation target, he says. After the interest rate decision is known, he says that Norges Bank has argued well that it was right to raise the interest rate today. – I am equally disappointed that Norges Bank did not signal that this is the peak. On the contrary, the bank says that they are prepared to raise the interest rate again if necessary. Building and construction and parts of the retail trade will thus get worse in the future, he says. Unemployment still low The price of oil has recently fallen, and the Norwegian krone is also becoming increasingly weak. This leads economists to expect price pressure from abroad when goods are traded in foreign currency. – The interest rate committee will probably also see until unemployment is still at a low 1.9 per cent, he told news just before the interest rate decision is announced on Thursday morning. The chief economist at Sparebanken Sør says that if the central bank chooses to raise the interest rate one last time, it is important that the bank also clearly signals that the interest rate peak has now been reached. – It is needed so that households and businesses will have security for the future, and for the markets for new car sales and new home sales to gradually get going again, he says. In today’s interest rate decision, the central bank says that the interest rate peak has been reached for this time.
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Setting up renta once again – news Norway – Overview of news from different parts of the country
