No more rate cuts, says SSB

Torbjørn EikaStatistics Norway. Torbjørn Eika.Photo: Cornelius Poppe / NTB scanpix

The time for cutting more interest rate is over, according to Statistics Norway.

There are both positive and negative signs in the Norwegian economy which indicate that Norges Bank is not going to cut the key rate from the current 0.5 percent on the monetary policy meeting which will be on September 22nd and also not later, according to Statistics Norway researcher Torbjørn Eika.

– Unemployment has increased very little in the past. One number from Nav has even shown a decline, while other indicators show stable unemployment and the second one are the positive mood indicators from Norges Bank’s regional network.

On the other hand, it is negative that inflation is high and that house prices strong. All this implies that no new rate cuts now, says Eika to NTB.

Hard to have interest rate shock

As late as June 6th this year SSB took it for granted that Norges Bank would come with a new interest rate cuts this fall. Two weeks later, Norges Bank announced itself that probably there would be a new rate cuts during the year.

Eika still thinks it will not come as any great surprise if the governor after the monetary policy meeting next week called off new rate cuts:

– If you read the newspapers and met by many chief economists at banks and financial establishments you will no longer believe in the new clean cut. It suggests that it at least will not be any great shock, he said.

Unemployment levels out

SSB briefly assumed that unemployment in the future will flatten out and lie slightly below current levels for the next two, three years. Meanwhile, it is expected that the decline in oil investment slows down but housing investment will increase.

SSB expects moreover that Parliament will endorse a gender expansionary government budget next year as the finance minister Siv Jensen (Frp) and Prime Minister Erna Solberg (H) has received in recent years.

Internationally, it is expected slight recovery ahead, while the effect of a weaker crown just will slowly seep into the Norwegian economy.

All in all, this indicates that the Norwegian economy is facing a slight upturn from 2017, according to Statistics Norway’s economic analysis, which was presented on Thursday.


Source: NTB scanpix / Norway Today