January 28, 2023

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Norwegian Politics, Nett på case

Norwegian Politics, Nett på case

Online to the point These are the comments written by the editor-in-chief of Nettavisen.

There are big bright spots in the Bank of Norway’s interest rate decision today. Admittedly, the key interest rate was raised by 0.25 percentage pointBut now the Norwegian patient is starting to respond to the drug.

– If everything goes as we think now, the policy rate will be around 3 percent next year, says Central Bank Governor Ida Waldenbaş.

That means people have to count on mortgage interest rates of between 4.0 and 4.5 percent during the spring, but then come the bright spots.

The interest rate market has already started to fall, and today’s decision was made with a yawn and without much of a surprise. In the money market, short-term interest rates are now the lowest since October.

Norges Bank sees different trends in the Norwegian economy, each pulling interest rates in different directions.

The price increase is higher than expected, but at the same time monetary policy is starting to work.

– Now we are witnessing a shift in the economy. In our regional network of companies, many expect a decrease in activity in the future. It is becoming easier for employers to obtain the workforce they need. In the housing market, prices have fallen, and we expect them to fall further until the fall of next year. Ida Walden-Bach says that the fact that pressure is declining in the economy will eventually contribute to lower price growth.

A little bit of cod liver oil, Mueller.

When newspapers are filled with stories about expensive electricity, rising prices and rising interest ratesIt causes anxiety even in people who manage well. This is why it seems so dark when many pollsters examine what people feel and what business leaders expect.

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Ironically, this is good news for interest rate cuts, and may be a sign that tightening is approaching, but a little too late.

“When setting interest rates, we are interested in balancing the risk of tightening too much versus the risk of tightening too little,” explains Ida Wolden Bache. – Monetary policy is beginning to affect the tightening, and we have not yet seen the full impact of the interest rate increase.

In other words: We’ve already received a lot of “interest rate drugs,” and Norges wants to see how the patient responds before more comes along.


Lots of uncertainty

The Bank of Norway is not sure whether the economy will cool down fast enough to prevent another hike in interest rates, or whether consumption will continue at full speed. However, what is certain is that we will not have a combination of high interest rates on the one hand – and unemployment and little purchasing power on the other. It will not be bleak black for ordinary people.

This is the balance that Norges Bank manages according to the following: – If pressure persists in the economy, and there is a possibility that inflation will remain high for a longer period, a higher interest rate than we currently perceive may be required. If inflation falls faster or unemployment is higher than expected, the interest rate may be lower than expected, Ida Waldenbach said.

In plain text: We’re probably getting close to enough medication, and then the patient will be gradually discharged after next year.

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