Economy and Business | Chief Economist announces series of rate hikes

(Online newspaper🙂 The US Federal Reserve beat Norwegian time on Wednesday night by one Raise the interest rate three times. US interest rates will rise sharply in the coming months, but will yesterday’s historic increase affect the Norges Bank?

The interest rate meeting here at home is June 23, but in fact today it was decided. DNB Markets only believes in a 0.25 percentage point increase next Thursday.

– The rally at the interest rate meeting was the global rise in interest rates sharply in anticipation of more dramatic jumps in the United States. There were signs of a higher rate hike following the US consumer price numbers for May, DNB Markets chief economist Kjersti Haugland tells Nettavisen.

big height

Haugland says international interest rates are an important “input” when Norges Bank’s interest rate committee decides what it wants to do. It actually happens on Friday 17 June, unless something extraordinary happens next week.

– Interest rates have risen significantly in recent weeks and is one of the factors that accelerated the rate hike in Norway, says DNB’s chief economist.

This has led economists in Norway, by far the largest financial institution, to expect interest rates to increase at every meeting, including temporary ones, until next spring.

If DNB experts believe, Norges Bank will raise its key rate by 0.25 percentage points in June, August, September, November and December, as well as January and March of next year. In this case, the prime policy rate is 2.50 percent.

– We think Norges Bank should move forward gradually, says Haugland.

track doubling

Handelsbanken expects a doubling increase next week, so if Norges Bank increases, the key rate will rise 0.50 percentage points to 1.25 percent. The triple rally in the US yesterday means nothing to what the Norges Bank is doing on June 23rd.

– No, the important thing is not to raise next week.

– Whether it will be 0.25 percentage point for households now or a twofold increase is not crucial, but where we are heading. The main point is that interest rates will be higher than what Norges said, and most economists say a rate hike will increase by one to two, says chief economist Marius Gunsholt Hof at Handelsbanken Capital Markets.

Hof says there are many factors driving up interest rates, but she doesn’t base this assessment on what happens from day to day.

Higher inflation, lower unemployment, a weaker krone, higher oil prices and a general increase in overseas interest rates are driving the trajectory of interest rates, says Sparebank1 Markets chief economist, Harald Magnus Andreassen. He now expects a 0.50 percentage point rise in interest rates than expected, and most of the increase in the first part of 2023.

– The top of the interest rate path can be adjusted upwards. We added 0.25 percentage points to 2.75 percent. Both a 0.25 percentage point and 0.50 percentage point increase are possible in June. We prefer 0.25 percent and then the same in August and September . Andreessen says

“I suspect that a 5 percent mortgage rate will have a significant impact on the economy, both through disposable income and home prices,” he continues.