Finance Minister Trygve Slagsvold Vedum says there is a public debate on setting interest rates in Norway. But he strongly rejects LO’s requests to have an interest rate interview with the central bank governor.
Less than 20 minutes ago
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On Thursday morning you will likely be notified of another cost, in addition to electricity prices, the latest interest rate hikes, and a general price increase of over six percent:
Then Norges Bank will announce the amount by which it will raise the key interest rate after it was zero percent a year ago, and it has now been steadily raised to 1.75 percent.
Sweden recently raised the interest rate by a full percentage point. The increase in Norway is expected to be slightly lower, perhaps at 0.5 percentage points.
There is an ongoing political debate over whether Norges Bank does not need to raise the interest rate as much as expected, as it could lead to a sudden stop and a rise in unemployment in the Norwegian economy, arguments put forward by the professor, among others. of economics heavyweight Steinar Holden.
– Positive
When VG met the finance minister on Wednesday, we raised the issue with him.
He says it’s important to keep the wall between his Ministry of Finance and Norges Bank on setting interest rates, but he thinks the debate is exciting.
– The key thing for me as a finance minister is that there is a very clear division of labor. Norges Bank controls interest rates through monetary policy. Fiscal policy is governed by me as the Minister of Finance and by the decisions Storting makes regarding state revenues and expenditures, he says and continues:
– But having said that, I would like to say that I think it is extremely important that there is transparency on the decisions that Norges Bank makes, including through the report on monetary policy, which is a comprehensive analysis, he says.
Vedum believes that a public debate is fine.
– When there is a new meeting on interest rates on Thursday, the central bank governor will meet openly and support his arguments. Norges Bank is responsible for interest rate policy, but the fact that Steinar Holden and others have a discussion about what the right interest rate level is and what considerations are important to make as a basis means that Norges Bank’s decisions are being weighed. . It is positive.
He adds:
– Some might say that it is an attack on the model: in my opinion it is the opposite. That there is a public conversation about what the right interest rate level is is not bad. Holden is a leading economist in the field and we also use it here at the Ministry of Finance, like leads a committee which will provide annual assessments of fiscal policy.
He was appointed last year by former finance minister Jan Tore Sanner (H).
Vedum is far from agreeing with LO’s chief economist, Roger Bjørnstad, that i After post recently asked Vedum to contact Central Bank Governor Ida Wolden Bache to clarify how Norges Bank interprets its interest rate mandate.
He justified this by saying that he believes Norges Bank is raising the interest rate too much too quickly.
– Totally disagree
Vedum says such a conversation is completely out of the question.
– I totally disagree with Bjørnstad that I should be whispering something in the ear of the central bank governor. We must have order and clear rules of the game. We have to look at the long lines: such an informal management dialogue would not create stability. There must be a wall between Norges Bank and us politicians in day-to-day management, he says, pointing out that this distinction has served Norway well.
– My job as finance minister is to ensure that as few people as possible become unemployed, says the finance minister and stresses that “high price growth over time creates insecurity for people and jobs”:
– We agree with LO there. But we can’t break the formal gap – the wall between Norges Bank’s interest rate setting and the fiscal policy we politicians manage – because it might be more politically comfortable now.
– It must also look at employment
He says Norges Bank’s main task is monetary policy.
– Where, by setting interest rates, they have to ensure that price growth is not too high, where the inflation target now is that price growth over time should be around two percent. They also need to consider how setting the interest rate affects employment and output in Norway.
– Holden considers it necessary to emphasize that they do not contribute to the increase in unemployment and that it is possible to obtain this result with a slightly more moderate setting of interest rates than previously assumed by Norges Bank?
– Both of these considerations are part of Norges Bank’s mandate. As I said, I am convinced that there is an open debate on this, but I do not want to enter into that debate.
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