Norway was only a few weeks away from an interest rate cut before today’s number bomb. In any case, just about all the economists took it for granted. Today’s shock figures for price growth have turned upside down. Norges Bank thought price growth would land at 2.6 per cent in February, instead it narrowed up again and got one percentage point higher. There’s a lot. The key policy rate as a percentage rate is set eight times a year by Norges Bank. The key policy rate controls interest rates in the banks and affects your housing expenses. The goal of setting up interest rates is for the high prices to go down again. The forecast tells us how Norges Bank believes interest rates will develop in the future. Read more about sources and reservations here. Higher management interest rates mean increased expenses if one has mortgage loans also core inflation, which disregards energy prices, surprised sharply with an increase of 3.4 per cent, well above the central bank’s expectations. The marked jump jump from January to February is significant. This has not been seen since inflation was on the rise a few years ago, and is not a good sign for price developments going forward. With an inflation target of 2 per cent, Norges Bank is again very far away from having control. It is especially food and electricity that pull the prices up. Food and beverages have become 7.5 per cent more expensive over the past year, while electricity and grid rent have increased by 7.1 per cent. These factors put further pressure on both households and monetary policy. Increased food prices The comparison of food prices and wage development says something if you get more, less, or just as much for the money. When developments on food prices are higher than wage developments, this means that food has become more expensive. Both numbers are average for the specified period. Read more about sources and reservations here. How much food prices have increased over the past year, together with wage development is struggling with inflation Now there is no doubt that Norges Bank is still struggling with inflation. Several things contribute to the unexpected high price growth: Food prices: Handelsbanken points out that we see a return to a previous seasonal pattern where food prices are adjusted up in February. This is in contrast to last year, as the food chains dropped to turn up prices as much as the usual costs increase: The trading bank also points out that cost growth in Norway is high, and this is closely linked to the strong wage growth. The problem is that productivity growth does not keep up, and companies must cover increased labor costs through higher prices. POLICY POLICY: Nordea indicates that prizing growth over the past year has been dampened by political measures, such as cuts in regulated prices. For example, ferry prices were reduced in February last year, which contributed to lower inflation. The same will happen in the fall when kindergarten prices – which were cut in August last year – no longer have a corresponding attenuating effect on inflation wage settlement can destroy the timing of price growth is demanding. The salary settlement is kicked off this week, and it happens with a backdrop that is more challenging than in a long time. The basic document for the settlement – the report from the Technical Calculation Committee for Income Settlement (TBU) – estimates a price growth of 2.5 per cent in 2025. But already there are good reasons to believe that this figure is too low. If price growth is higher than estimated, it will put further pressure on wage growth this year. And with an already high wage growth, Norges Bank’s job becomes the more difficult. Although wage growth is on the way down, it is still too high to help get inflation back to the target. If it goes so much on top of this comes the way wage growth is determined in Norway, which is not currently playing on teams with Norges Bank. It is the competitive industry that negotiates first, and there it goes so it hurts – not least thanks to the weak krone exchange rate. When the export industry serves well, it is natural that employees want their share of the cake. That’s the whole point of the Norwegian wage model. And a solid salary increase in this sector sets the standard for the rest of the business community and will provide a broad wage growth. All indications are that we are going into a new good wage settlement, after two years of strong wage growth. Never provided a cut guarantee but what does this mean for Norges Bank and the long -wared interest rate cut in March? Although Central Bank Governor Ida Wolden Bache has said that they are likely to lower interest rates, she has never provided a guarantee. Her wording has been: “If we do as we now see, we put the interest rate down in March” Here she has deliberately kept the door glowing to turn around on the plans. She has tied herself to the mast with a pile – a knot that is perfect for temporary parties, but easy to loosen again. They think Statistics Norway misses interest rates again: – Maybe a little in excess? And there are good reasons to be careful. She has also said that “as it now looks, we will get rise growth back to the goal without a major increase in unemployment”. Today’s figures show how tough and stubborn price growth can be when it has first been attached. The experience of previous inflation periods is that it takes time to get it under control – often longer than you hope. One interest rate cut in 2025? Both Nordea and DNB Markets have now reassessed their interest rate forecasts and dropped the expectation of an interest rate cut in March. Other banks say that if Norges Bank still cuts in March, it can be the first and only interest rate cut in the entire 2025. The only thing everyone agrees is that Norwegian mortgage customers have to consider waiting longer before they notice a proper relief in interest expenses. The interest rate cuts come – but maybe not as fast as many had hoped. For anyone waiting for lower interest rates, the same applies to the inflation target: Patience becomes the key. Interest calculator The calculator uses formula for annuity loans to calculate your monthly costs. Nominal interest rates are used here. That is, there will be one transaction fee in addition that will vary from bank to bank. Today’s interest rate is taken from DNB’s mortgage rate for young people, and different banks will have different interest rates. The figures stated here will therefore be approximate to you. Monthly expenses are interest and installments overall. Read more about sources and reservations here. See how much you have to pay if interest rates increase. Published 10.03.2025, at. 11.29
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