In its recent economic report Handelsbanken( the Trade Bank) predicts more trying times for the Norwegian economy and that the federal funds interests rates will fall below zero in 2017.
– There are significant “headwinds” both globally and here in Norway , chief economist Kari Due Andresen of Handelsbanken Capital Markets says to E24.
The Broker house has already predicted zero interest rates in 2016, and they believe the stage is set for further cuts after the New Year.
– What is new is that we envisage that interest rates will fall below zero next year . The reason is that Norges Bank(the National Bank) has stated this to be a possibility. In March they said that interest rates could become negative if the situation for the Norwegian economy should prove to get worse than what they envisioned, and there are indications that this is proving to be the case, Due-Andresen says.
Handelsbanken envision that the deposit rate will drop to -0.10 percent in the second quarter of 2017, before further cuts will lead it drop to -0.25 percent by the end of year.
The deposit rate is the interest rate banks achieve on their checking account at the central bank, and is currently the key interest rate of Norges Bank. It was reduced to a record low 0.5 percent in March
Source: NTB scanpix / Norway Today