Increased risk of double interest rate hike in June, Norwegian economists believe

KronerPhoto: Gorm Kallestad / NTB
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Low unemployment figures increase the probability that Norges Bank will raise interest rates by twice as much as previously expected in June, economists at several banks believe.

In May, the unemployment rate was 1.6%. The central bank has said that the interest rate will probably be raised by 0.25%, to 1%, in June. Several economists believe the hike could be twice as high.

“Norges Bank has said they plan to raise the interest rate by 0.25% in June, but as we assess the situation, the risk of a double interest rate hike has increased,” chief economist at Handelsbanken Marius Gonsholt Hov said.

Swedbank economists Marlene Granerud, Jon Espen Riiser, and Kjetil Martinsen think the same.

“Norges Bank is not afraid of raising interest rates, and the NAV figures suggest that Norges Bank will implement faster interest rate hikes in the future,” they wrote in a report on Friday.

Unemployment figures

The interest rate is usually raised by a quarter of a percentage point at a time, but in March, the key interest rate was increased from 0.25 to 0.75%.

Nordea economists Dane Cekov and Kjetil Olsen say the unemployment figures are “a factor that speaks in favor of a higher interest rate path.” However, they do not think the central bank is increasing the pace for the time being.

“We still believe that Norges Bank will stick to the plan of one interest rate increase per quarter,” Cekov and Olsen noted.

DNB also believes that the increase will be as planned in June, 0.25%.

Source : © NTB Scanpix / #Norway Today / #NorwayTodayFinance

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