June 25, 2022

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Economist: US interest rate hike paves the way for twice Norwegian rate hike

Economist: US interest rate hike paves the way for twice Norwegian rate hike

On Wednesday, the US Federal Reserve raised its key interest rate by 0.75 percentage points, the largest jump in interest rates in 28 years – and a rate hike is expected next time.

What they do affects the European central banks and affects the Norges Bank. This paves the way for triple or double increases in Europe and Norway. This will clear the way for Norges Bank to make a double (0.5 percentage point) increase in no time, says Storebrand’s head of global allocation and interest rates, Olav Chen for Dagbladet’s stock trading.

In Norway, up to ten interest rate increases were priced into the market over the next eighteen months. Chen continues, depending on what’s happening in the US, it could pave the way for this to actually happen in Norway.

The reason for the high interest rates in the US is due to the high rates of inflation, the decline in the stock market and the strength of the dollar. According to Central Bank Governor Jerome Powell, the interest rate could rise by another 0.75 percentage points after the bank’s next interest rate meeting in July.

Nordea’s consumer economist Derya Incedursun says TV 2 The grip of interest rates in the US will contribute to the effects of clear waves in Norway. The Norwegian krone is weakening, which in turn means higher prices for imported food and holiday trips – among other things.

But the weakness of the Norwegian krone will contribute to the growth of the export sector.

– Then Norwegian goods will be cheaper abroad. Norway sells more, and abroad buys more. And it will be able to contribute to more jobs, Enkidorsson says.

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The Norges Bank said the interest rate will likely rise by 0.25 percentage points to 1 per cent in June. Many economists believe that the jump could be twice the rise.