– Not much needed – E24

– Not much needed – E24

Wednesday could be decisive for interest rates. Economists remain uncertain about the way forward.

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– In isolation, it creates doubts about whether there will be any interest rate cuts this year.

That's what Nordea's interest rate strategist Lars Mouland says about the structure Pre-material solutionPre-material solutionThis is modeled on the Norwegian wage system, where the wage settlement for the industry, called “pre-objective”, lays down guidelines for wage settlement in other sectors..

It came to 5.2 percent after the union agreed with Norsk Industries on Sunday's wage talks. Norges Bank expects 4.9 percent in 2024.

– They now have to take it upon themselves. Mouland says it will take a lot to slow down wage growth.

As people have more money in their hands, higher wages will help put pressure on prices. Norges Bank tries to control price inflation.

I think a weak Chron will cause the surge

– Is there any possibility of interest rate hike?

– It doesn't take much. Introducing a devaluation of the krone to NOK 12 to the euro could put a hike back on the agenda.

On Norges Bank's interest rate trajectory, the probability of another rate hike in the second quarter is 5 to 10 percent. Handelsbanken has previously warned that this may be relevant given the continued weakening of the krone exchange rate.

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– Reverse risk in autumn

Mouland says he expects price growth to slow somewhat on an annual basis in the future.

— but we think there's an upside risk when we get out in the fall.

This is Core inflation Core inflation Ignores energy prices and tax changesNorges Bank is very careful when setting interest rates. On Wednesday, new inflation figures for March will come from Statistics Norway. In February, core inflation eased to 4.9 percent.

Wage growth, rising services inflation and higher rental prices are part of the backdrop for the risk of higher core inflation beyond the autumn, Mouland says.

– This makes it difficult to get core inflation below 4 percent, he says.

Norges Bank, for its part, expects core inflation to ease to 3.9 percent in June. Latest Predictions.

Trust the cuts in September

Odmund Berg, senior economist at DNB Markets, has not completely dismissed the possibility of an interest rate hike. He further believes that we will get an interest rate cut in September.

– We have not changed our forecast on this, he says.

Nevertheless, he points out that inflation figures due on Wednesday will be interesting to watch. Economists expect core inflation to come in at 4.2 percent in March, according to Bloomberg. In February, it came down to 4.9 percent.

– I think it's natural to cut interest rates anyway if we get price growth that indicates we're moving down towards the target. It's like a sort of adjustment to where the price hike is, he says.

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– Pulls in different directions

The veteran economist says it is not easy to create clear visions for the way forward in the current scenario.

– Both, because the figures coming in can be interpreted in different ways, but it depends on what the central bank wants, he says.

Asked which would be more decisive for interest rates going forward, Krohn says, for example the level of interest rates abroad or inflation figures, which “we think about a lot.”

– and we can be a little uncertain about this. There are many factors that move a little during the day and pull a little in different directions, Berg says.

– How do you think we will describe the wallet year 2024?

– For now, I think the message we gave in January is good. That year 2024 will be the year the arrows rotate in the right direction. In other words, where do you go from a weak purchasing power improvement to an improvement?

– When you look at 2024 as a whole, it's practically flat. That's because interest rates went up at the end of last year and there's still high inflation, he says.

Joshi Akinjide

Joshi Akinjide

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