Interest rate, Norges Bank | Soon the verdict will come from Norges Bank: This is how much the interest rate will increase

Interest rate, Norges Bank | Soon the verdict will come from Norges Bank: This is how much the interest rate will increase
Interest rate, Norges Bank | Soon the verdict will come from Norges Bank: This is how much the interest rate will increase

At 10 we know the answer. The expectations are that the central bank will raise the key interest rate by 0.50 percentage points to 2.25 per cent. This increase comes just five weeks after the previous double interest rate hike. It is normal for Norges Bank to change the interest rate by 0.25 percentage points at a time.

DNB Markets writes in the morning report that the interest rate was raised by 0.50 percentage points in August as a result of price growth in Norway being stronger than expected. DNB believes that Norges Bank will signal today that stronger lye is needed to stem price growth.

But the experts at Norway’s largest bank believe it is unlikely that the increase will be more than 0.50 percentage points at this meeting. They envisage the policy rate reaching its peak of 3.25 per cent in June 2023.

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Highest in eleven years

The key interest rate in Norway has not been up to 2.25 per cent since December 2011. The interest rate increases so far this year have not been so strong in such a short time since 1998, but the increases come from historically low levels.

The banks quickly follow up by raising interest rates to customers. The first messages will probably come on Friday. The banks have a six-week notification period when they set the interest rates for existing loans.

A mortgage of NOK 3 million will initially be NOK 15,000 more expensive in the year before tax when the interest rate rises by 0.5 percentage points. The tax deduction amounts to 22 per cent.

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Strong rise

Market interest rates have skyrocketed this year in line with expectations of a rise in interest rates. The 3-month money market rate is now up to 2.85 per cent (see the graph below), the highest level since the beginning of January 2012. This rate is important for mortgages, which vary in line with market rates.

This week, both the Swedish and American central banks have raised interest rates sharply. The end date for Norges Bank’s assessments is basically Friday 16 September. The strong foreign interest rate increases may, however, affect interest rate setting here at home in the future,

Today’s interest rate meeting, which was formally held yesterday, is an ordinary interest rate meeting. Norges Bank comes up with new economic forecasts for the Norwegian economy, which they do four times a year. The previous meeting in August was a so-called intermediate meeting.

The article is in Norwegian

Norway

Tags: Interest rate Norges Bank verdict Norges Bank interest rate increase

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