– It is unreasonable for the interest rate to remain unchanged – E24

Economists speaking at E24 think it’s pretty clear where Norges Bank will set its key interest rate this week. – That was actually incredibly exciting – until the inflation figures came out, someone says.

On Thursday, the Bank of Norway will set its key interest rate. As usual, there is great excitement associated with the meeting.

Price growth in Norway slowed to 5.4 percent in July, compared to a year earlier, according to Statistics Norway. It was a larger drop than expected.

Economists spoke to E24 that they believe it eases interest rate concerns in the market.

– Now there is no danger of a double interest rate increase, Chief Economist Marius Gunsholt-Hof told E24 after seeing the inflation figures.

This analysis is supported by Kerry M. Knudsen, Chief Economist at SpareBank 1 SR-Bank.

– This was actually incredibly exciting – until the inflation figures came out from Statistics Norway on Thursday. Now bankers are almost guessing that there will be one jump in interest rates, not two. He also says that it is also unreasonable for the interest rate to remain unchanged.

Now I mostly wonder about the path for interest rates at Norges Bank going forward, both when interest rates peak and when interest rates fall again. And I think we will have two more jumps in interest rates, one next week and one in September, and the peak in interest rates will be in September, he continues.

It is believed that the interest rate will be held at its peak interest rate for about a year before the Bank of Norway starts cutting rates.

– This will do this time

Sarah Middegaard, chief economist at Handelsbanken, believes that a single rate jump next week is very likely.

– We see that inflation figures have dropped significantly and are now not far from the Bank of Norway’s expectations. Then there is no weight for a double interest rate increase, and 0.25 percentage point would be appropriate for this time, Midgaard says.

It also argues with the evolution of the exchange rate.

– Development is four percent stronger than the Bank of Norway assumed. The chief economist says it eases inflationary pressure.

According to her, the Norwegian economy has proven to be more resilient than the Bank of Norway had anticipated in its forecast. But she also believes there will be another rate hike in September.

A larger-than-usual decline in housing prices

– With low inflation and a small increase, does that reduce the likelihood of a significant drop in house prices?

Home prices were stronger than usual this spring, even as interest rates increased. Midtgaard says, “We think that home prices will be affected more in the future by interest rates.”

It looks like peak interest rates are ending higher than many expected, and it’s likely starting to hit households. And she continued: I think that will lead to lower housing prices in the fall, and more than usual in the fall.

But at the same time, Midtgaard notes that Norges Bank has continued to raise interest rates because the Norwegian economy has proven resilient.

– We believe that the first cut in monetary policy will come in the third quarter of next year. She says that it will clearly affect people’s monthly expenses.

– There probably won’t be too many cuts at first either. You may have to switch to a higher interest rate, says Midtgaard.

– incredibly exciting

Other things of interest for the Norwegian economy include industry, trade and investment figures in China this week.

– We should talk more about China now. Both because they were and still are one of the world’s engines of growth, but also because they are now suffering from deflation while Europe is fighting inflation, says Knudsen at SpareBank 1 SR-Bank.

He believes one should watch carefully whether the economy cools down further.

– In this case, this could affect the prices of oil and gas, which are the two most important Norwegian export products, he says.

Knudsen also believes that the interest rate report from the US central bank that will be released on Wednesday, and the figures on oil investment figures for July that Statistics Norway will present on Thursday, are interesting for the Norwegian economy.

Here we will find out more about how the central bank governor views the interest rate path. It’s incredibly exciting to see if the US has peaked interest rates or if it envisions an interest rate hike, he says of the rate report.

All signs are that we are very close to the top, but I think there will be a final rate hike at the next meeting in September. Then he follows up with the question: When will the interest rate be cut for the first time.

Knudsen believes that the US will reach its interest rate peak in September, and that the US central bank will start cutting its key interest rate around Christmas.