Norges Bank sets the interest rate – E24
Recent figures from companies in Europe this week may capture some of the Ukraine shock. In the US, tenants will elaborate on why they are now raising rents seven times this year.
– Norges Bank’s decision on Thursday will be a clearly important event, says Kjersti Haugland, chief economist at DNB.
On Thursday, the Central Bank of Norway will set the key policy rate and publish a new edition of the Monetary Policy Report.
– We think they raise the interest rate to 0.75 percent, says Haugland.
There is also consensus among most other analysts. The interest rate hike that may occur on Thursday was also announced by Norges Bank during the previous lease decision in December.
– We also believe that Norges Bank has a good deal of leasing. There they will bake in three more raises this year along with raises in March and June next year, but with a probability of a little more. Then we will reach a peak of percent next summer, says Haugland.
The interest rate path is Norges Bank’s estimate of what they themselves will set the key interest rate over the next couple of years.
I think the interest rate will be even higher than previously predicted
– Most of what has happened since the last time helps to raise the leasehold. The Norwegian economy is quite red-hot, says Haugland.
She points to an inflationary pressure that is building up and oil prices that have risen sharply. In addition, Norwegian companies have problems finding labor, they notice a shortage of intermediate goods, and the companies themselves have adjusted the estimate for wage growth from 3.3 to 3.7 percent, according to the latest report from the Regional Network.
– I do not guess in Norges Bank to signal that they are worried about inflation, but that as the situation is now, it makes sense to get interest rates up, says the chief economist at DNB.
She refers to raising the interest rate to a percentage over the next year as “removing stimulus”.
– Up to percent is a man in a stimulating situation. Then it is a good assessment not to contribute to the cost pressure building up, because if you come crookedly down the jump edge and are too sent out, then you can react much harder at the next crossroads. That is what is happening with the central bank in the USA, says Haugland.
Wants more transparency from Norges Bank
Haugland was among the authors of Norges Bank Watch 2022, an independent assessment of monetary policy in Norway last year. The interest rate decision on Thursday will be the central bank’s first current year.
– What should Norges Bank change and what should continue with as before in the new year?
– Norges Bank does a lot of good, they have solid analyzers and good communication. What is missing is far too little insight into the discussions that set the policy they have, says Haugland.
Hi Monetary Policy Committee in Norges Bank, currently consisting of four people, has the final authority to set the key interest rate. After their meetings, they publish short protocolswith about a paragraph on why the decision will be as it is.
– What discussions do they have about risk, what considerations do they have, and what discussions do they have about weighing different risk factors? We have far too little information about that.
– There is great independence within the mandate of Norges Bank. It also places great demands on transparency, says DNB’s chief economist.
Recent figures from Purchasing Managers
On the same day as the key policy rate is set, there will also be figures for how the economy is doing on the continent.
– We have some first editions of PMI for the month of March. It provides fresh information about activity development in the EU and the UK, says Haugland.
PMI is the purchasing managers’ index, and says something about whether purchasing managers in companies expect increased or less activity in the next month.
– These PMI indices should have seen some of the effects of the war, but may not have seen everything. When you collect more answers now in March, they may therefore be weaker in the final measurements, says Haugland.
US interest rate settlers are speaking out
During the coming week, several of the members of the US Federal Reserve’s Monetary Policy Committee will speak out in various arenas.
– It is of course interesting now quite a short time after they are relatively high messages. The committee does not always agree, but now it seems that there is even more spread in the field than usual.
The US Federal Reserve, called the Fed, last week raised interest rates for the first time in over three years. They also announced six more rent increases this year. That was more than many investors expected.
– There is a good deal of excitement associated with whether they will proceed a little faster. It is an assessment among the members of the committee that depends on how stubborn they think inflation will be and how willing they are to have is in the stomach to look at it, says Haugland.