Believes Norges Bank Should Slow the Pace of Interest Rates – NRK Norway – News Overview from Various Parts of the Country

This summer, Norges Bank raised its benchmark interest rate by a full percentage point.

Tomorrow, economists expect another sharp rise in interest rates from the central bank.

We have not had such a sharp rise in interest rates since 1998. At the same time, the level of debt among most people today is much higher and interest rate rises are much stronger because many people have interest rates. variable interest on their mortgages.

Chief economist Jan Ludvig Andreassen in the Eika group now comes with a warning.

Because the rate hikes this summer have not yet affected household finances. Banks must notify all mortgage interest rate increases six weeks before they occur.

– I think interest rate hikes are now completely unnecessary. The Norwegian economy is already weakening and we don’t need to pat the economy on the back when it goes downhill, she says.

Jan Ludvig Andreassen, chief economist of the Eika group.

Photo: Johan B. Sættem

Central banks around the world are struggling with soaring prices.

Interest rate shock in Sweden

In Sweden, the key interest rate was yesterday set more than expected – by a whole percentage point.

Here at home, most experts predict that Norges Bank will raise the key interest rate by double what is considered a normal interest rate change tomorrow.

– There are already quite a few austerity measures on the way, the effect of which is not yet known. There are every reason Norges Bank is staying calm on Thursday, he says.

LO also believes it is important that the central bank now refrains from double interest rate hikes. Chief economist Roger Bjørnstad has i E24 and DN warned against introducing new double interest rate hikes now.

Roger Bjørnstad

Chief economist Roger Bjørnstad in LO.

Photo: Johan B. Sættem / NRK

He does not believe that rising prices will lead to unbridled wages and fears that the consequences of interest rate policy will be that many people will lose their jobs.

– Now they have to calm down. Inflation is imported and is not due to domestic conditions. We have a wage structure that handles that kind of inflation, he says.

Professor Steinar Holden from the UIO did it too to E24 and in Dagsnytt 18 he warned against raising interest rates a lot now, due to the danger of a significant rise in unemployment.

Norges Bank reduces the key interest rate

Behind this door is the key interest rate, which affects, among other things, the real estate interest rate for all Norwegians.

Photo: Ørn E. Borgen / NTB

– It is reasonable that Norges Bank slows down more

Sparebank1 Markets chief economist Harald Magnus Andreassen believes, however, that the central bank should stick to its plan to raise interest rates further.

So the central bank could rather take its foot off the accelerator in 2023, if economic development requires it.

The danger is that expectations that everything will be more expensive tomorrow than it costs today become fixed.

– It’s a little too early to take a break in setting interest rates right now. The reason is quite simple, that if we don’t slow the economy down, there is a danger of the economy crashing, she says.

The result can therefore be a spiral in which prices and wages compete to rise more.

– Experience shows that with such low unemployment and such a large labor shortage in the economy, wage growth will eventually increase, even if this is not the result of the negotiations between LO and NHO. So the price increase will also be more than 2%. Therefore, it still makes sense for Norges Bank to slow down, he says.

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