Central banks in the USA, Norway, England and Japan will make interest rate decisions this week.
– This will be a great week with a lot on the agenda, says Kerry Knudsen, chief economist at Sparebank 1 SR-Bank.
For those interested in macroeconomics, there will be housing numbers, labor market numbers and inflation numbers to dig into, and a number of companies release quarterly numbers, including Apple and Norwegian.
There is no doubt that the greatest tension is related to the interest rate decisions of the Norwegian, American and British central banks.
We see that interest rates have begun to reach their peak in a good number of countries now. He says that although the stabilization of the situation is good news, there is great enthusiasm about further development.
The tension lies in the words
On Thursday, the stage is set for the interest rate meeting and interest rate decision from Norges Bank. The interest rate meeting is a so-called “intermediate meeting”, which means that the central bank will not come up with a new economic forecast or a new path for the interest rate.
Economists agree that Norges Bank will keep the interest rate unchanged at 4.25 percent. In this case, this would be the first interest rate break since January.
The excitement therefore lies in the press release issued by Norges Bank and the signals given by Central Bank Governor Ida Wolden-Basch about the interest rate meeting in December.
At the previous rate meeting, Bash said they were likely to raise rates further, most likely in December.
“I think Norges Bank will tone it down a bit, adjust the wording and reduce the likelihood of a rate hike because inflation has been lower than expected,” says Knudsen.
Norway’s inflation rate fell to 3.3 percent in September.
– We believe that the interest rate has reached its peak, he says.
He believes the only thing that could signal another increase in interest rates in December is the krone exchange rate, which is still very weak against the dollar.
For its part, DNB Markets believes that Norges Bank will raise interest rates in December.
Powell can move the krone exchange rate
In the United States, interest rates are expected to remain unchanged at the interest rate meeting on Wednesday. The interest rate is now 5.5 percent. According to Knudsen, it appears that the interest rate peak will remain in place.
– This is good news for Norway and the Norwegian krone exchange rate, says Knudsen.
The value of the Norwegian krone has declined against both the dollar and the euro over the past year. As of January 2021, the krone has fallen by 21% against the dollar.
At some point, interest rates will fall again in the United States. When Fed Governor Jerome Powell starts talking about it, it’s exciting, Knudsen says.
– If we’re lucky, they’ll start talking about it on Wednesday in the United States. This may strengthen the Norwegian krone.
On Thursday, the Bank of England will present its interest rate decision. There is also an expectation that the interest rate will remain calm.
– At the previous meeting, the Bank of England was more cautious than expected. The interest rate was kept unchanged, but it was expected to increase. Knudsen says that the central bank justified the decision with a weaker labor market.
The key interest rate in England is 5.25 percent.
European inflation numbers
Last week, the European Central Bank decided to keep interest rates unchanged. The central bank justified this by the decline in inflation in September.
This break comes after the central bank raised interest rates for ten consecutive meetings. The central bank justified the interest rate break with lower inflation in September.
Monday and Tuesday will see inflation figures from Germany and the Eurozone respectively.
– Everything central banks do and say is affected by and depends on inflation numbers. Therefore, each inflation number is a new test for central banks, Knudsen says.
Norwegian housing prices
Norwegian housing price statistics will be published on Friday.
In September, house prices fell by 1.6 percent – 0.2 percent adjusted for seasonality. This was the second weakest September in the history of house price statistics.
DNB Markets expects house prices to decline by 1.0 percent adjusted for seasonality. Norges Bank expects a decline of 0.3 percent.
The most important number to keep track of is unsold homes. This says a lot about the mood in the market, says Kerry Knudsen.
Last month, there were 50 percent more homes for sale than the average since 2009. There are significant regional differences.
In Asker and Baerum there were 109 percent more homes abroad, while in Stavanger there were 25 percent fewer homes.
Interest rate meeting in Japan
The Bank of Japan begins its interest rate week on Monday. Most economists expect the interest rate to remain unchanged at -0.1 percent Bloomberg.
In the previous interest rate meeting in September, they kept the interest rate unchanged.
– In light of the extremely high uncertainty associated with economies and financial markets at home and abroad, the Bank will patiently continue to ease monetary policy, while at the same time responding flexibly to developments in economic activity and prices, the Bank of Japan said in connection with the interest rate decision.
The escalation of the conflict may affect the markets
It was this weekend Great development In the war between Israel and Palestine. On Friday evening, Israel intensified its attacks on the Gaza Strip.
More than 1,400 people were killed in Israel following the Hamas attack on Israel on 7 October. More than 7,700 people have been killed so far in Gaza after the Israeli attack. He writes VG.
It is not known how this will affect the global economy. The question is whether the conflict will escalate to include more Arab countries.
The sad truth is that what happens in Israel and Gaza alone does not have such a significant impact on international markets, says Anders Johansen, chief economist at Danske Bank.
He explains that the global economy moves very quickly after regional conflicts. This also appeared after the war in Ukraine – despite the situation of energy policy in Europe.
He explains that what is crucial is whether the rest of the Arab world will participate, especially Iran.
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