Economists believe the interest rate will continue at the same level for a long time

Norges Bank mortgage policy rateNorges Bank (Bank of Norway), Headquarters Photo: Norges Bank

Economists looking to the horizon don’t believe in an interest rate hike from Norges Bank in the short term. But the interest rate will not go down.

On Thursday, Norges Bank will release its second to last interest rate decision before the summer.

‘I expect interest rates to be at the same level as today. Macroeconomic signals, price trends and business cycles indicate that to be the case’, said NHL Professor, Ola H. Grytten to NTB news agency.

Professor Steinar Holden at the University of Oslo also believes that there is a high probability of an unchanged interest rate remaining at 0.5%.

‘At the previous monetary policy meeting in March, the bank stated that the key rate would most likely ‘remain at the current level in the near future’. Since that time, not much that was surprising happened, he said.
Chief economist, Andreas Benedictow, of Socio-Economic Analysis pointed out that strong growth in housing investment had counteracted the downturn in the Norwegian economy, followed by bad times in the oil sector.

‘It seems that the negative period for the oil sector is about to approach the end. On the other hand, a leak in the housing market is indicated in the future’, he said to NTB news agency.

‘Although we cautiously expect the growth of the Norwegian economy to be upwards, GDP growth remains weak.

Unemployment has fallen, but that is largely due to the fact that many people have withdrawn from the labour market.

Wage growth is low, and inflation has fallen and is likely to be under the Norges Bank inflation target. This is because Norges Bank maintains low interest rates,’ he said.

Norges Bank’s target is an annual inflation rate of just below 2.5%.


Source: NTB scanpix / Norway Today