Interest rate increase – a real package of crap

For Christmas, Jonas Jar gets the store And Trygve Slagsvold Vedum which is a real crap package as a gift, best regards from Norges Bank.

A few days ago, the central bank governor gave them a small shock in interest rates. The interest rate was raised by a “quarter”, much to the surprise of many economists and experts and great frustration among ordinary people.

So we can count interest rate rise number nine over the past year.

Many families enter the Christmas season with a weak economy and a fair number of gifts in the red in their bank accounts. Frustration with this is evident in opinion polls for the two ruling parties. According to Dagbladet’s latest party measure, the government is losing 40% of its states compared to the last general election. The Labor Party got 17.9 percent. Center Party: 6.5 percent.

It’s an amazing fall.

The above-mentioned interest rate has now reached 4.5 percent, From scratch like in the old days with epidemics, masks and damned grandmothers.

This means that many people could end up getting mortgage interest rates of up to six percent. As highly indebted people, this severely impacts daily economic life.

The faint bright spot is that this maybe It is the last rise in interest rates we have seen in several years.

We hope, and most likely, that will be the case, but Central Bank Governor Ida Wolden-Basch would not rule out raising interest rates further if inflation is not under control next year as well.

The goal is for inflation, i.e. price increases, to be around 2% a year, but last year prices rose to roughly 5 or 6%, depending on how you calculate.

So there is still a long way to go until the economy improves.

If the peak interest rate is now reached, When interest rates will be reduced and how quickly is the question on most lips. Unfortunately, Norges Bank gave us a cold shower when it decided, at the same time as it raised interest rates, that we should settle for high interest rates for the long haul:

“While the committee now assesses the outlook and risk picture, the key interest rate is likely to remain at this level for some time to come,” the central bank says.

It may be almost a full year before the central bank takes on the task of lowering interest rates.

For the government, it is just a crisis that needs to be dealt with.

Because next fall there is only one year left until the general election. Then Labor and the Center Party begin to feel the urgent need to convince voters that they have improved under this government.

But most likely, Store and Vedom will not be able to reap the planned gains for safe economic management during difficult times.

The strategy was probably useless anyway. Because although the results may be present, they are difficult to detect.

It became clear early in the austerity period that the government’s strategy was to appear responsible and judicious in spending money. The message was simple: the government must tighten fiscal controls to avoid raising inflation, and thus the key interest rate, even if it means breaking an election promise or two.

It worked halfway.

Because interest rates increased anyway Month after month, despite the government’s fairly stagnant budget. This, to say the least, requires voters to see the direct benefit of abstaining from spending when mortgages appear to be becoming more expensive, no matter how tight state budgets are.

If we add long food lines and growing poverty to the political equation, we get a message that seems disconnected from reality. Heart brokensome might say.

A fair number of voters seem to believe that the government has been too quick to respond to this difficult time for many.

Regardless of whether you think so Whether the government’s strategy from the beginning was reasonable or not, the gains will now come too late to be reaped before the elections anyway.

It is clearly advantageous for the government for the peak in interest rates to be lower, to come earlier, and to signal a decline much more quickly than they appear now.

Labour’s support was inversely proportional to electricity prices, inflation and interest rates. Despite fairly generous electricity subsidies, cheap daycare and moderate tax cuts for middle- and low-income people, gratitude has not been shown.

Perhaps the government will not be able to regain its popularity again until the economy is on the road to recovery. There is no indication that this will happen in time before the next elections. The government will most likely be associated with a loss of purchasing power rather than smart spending.