Largest interest rate jump in the US since 2000 – NRK Urix – Foreign news and documentaries

The US Federal Reserve raises the key interest rate by 0.5 percentage points. It became known Wednesday night.

This is the highest interest rate jump since 2000.

An increase in the key interest rate in the US was expected in advance, because prices have been rising sharply.

An increase in the key interest rate is the US Federal Reserve’s attempt to curb very high inflation.

Jump to 0.5

Chief strategist Anders Johansen in Danske Bank says the interest rate jump was expected.

When unemployment is where they want to be and inflation is high, then interest rates should actually be close to a normal level. Now it is 0.25 percent. Then they have to raise interest rates, and maybe they should have already done so a while ago.

In Norway, the USA and many other countries, the central banks raised the key interest rate to around zero per cent during the corona pandemic.

With an economy that is on the road to recovery, interest rates are also being raised to a normal level.

While Norges Bank began this process in September last year, the US Federal Reserve waited until March with the first interest rate hike.

They’re a little behind. Therefore, they set it up at 0.5 per cent, and not what is usual for central banks, which is 0.25 per cent.

Chief strategist Anders Johansen at Danske Bank.

Photo: Danske Bank / Sturlason

Norway before

In March, Norges Bank decided to raise interest rates from 0.5 to 0.75 percent.

Now the US Federal Reserve is jumping to the same level.

At the same time, further tightening is expected, also in Norway.

Interest rate and currency strategist at Handelsbanken, Nils Kristian Knudsen, says that the rise in interest rates in the US gives us a good indication that interest rates are on the rise.

Knudsen also says that he will not be surprised if Den norske bank raises the key interest rate by 0.5 percentage points during the summer or autumn.

– The interest rate can be expected to grow both faster and steeper in this country, he says.

The market expects a sharp rise

Everyone agrees that interest rates will rise. But whether we in Norway will get an as steep rise as in the US is uncertain.

– They will raise in June, they will raise in September and they will raise in December. They have said that. But what the market is pricing now is that they will raise interest rates at one of the interim meetings as well, or do what we see in the US now: That they will come with a double increase in June or September, says Olav Chen in Storebrand.

In that case, it will mean that we get four more interest rate hikes this year.

On Thursday 5 May, Norges Bank will announce its interest rate decision.

– There is quite a lot of tension associated with the interest rate meeting tomorrow. Some have speculated that they will raise interest rates tomorrow already, but we do not think so, says Chen.

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