When will interest rates in Norway start to come down?
A combination of a weak krone and high inflation means that consumers in Norway may have to wait until 2025 before interest rates on loans and mortgages come down.
Later this year, Norway’s central bank, Norges Bank, is expected to bring the key policy rate to 3.75 percent.
The bank is choosing to pursue interest rate increases as the bank believes they can be used to curb inflation. Furthermore, analysts also point to higher interest rates as an option to reinforce Norway’s struggling krone. The current key policy rate is 3.25 percent.
A key policy rate of 3.75 percent means mortgage and loan interest rates of around five percent. Once rates reach their peak of around five percent, consumers may have to wait until 2025 before they come back down again.
“This involves a relatively long period where the mortgage interest rate will remain around 5 percent,” Sara Midtgaard, senior economist at Handelsbanken, told finance paper Finansavisen.
She explained that Norges Bank would continue to use interest rates to curb higher-than-anticipated inflation and a weak krone. A weak krone contributes to inflation by making the cost of important goods more expensive. However, she said that Handelsbanken expects the krone to strengthen in the near future.
Midtgaard added that it was possible that Norges Bank would choose to take the key policy rate up to four percent if the situation didn’t improve.
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Later this year, Norway’s central bank, Norges Bank, is expected to bring the key policy rate to 3.75 percent.
The bank is choosing to pursue interest rate increases as the bank believes they can be used to curb inflation. Furthermore, analysts also point to higher interest rates as an option to reinforce Norway’s struggling krone. The current key policy rate is 3.25 percent.
A key policy rate of 3.75 percent means mortgage and loan interest rates of around five percent. Once rates reach their peak of around five percent, consumers may have to wait until 2025 before they come back down again.
“This involves a relatively long period where the mortgage interest rate will remain around 5 percent,” Sara Midtgaard, senior economist at Handelsbanken, told finance paper Finansavisen.
She explained that Norges Bank would continue to use interest rates to curb higher-than-anticipated inflation and a weak krone. A weak krone contributes to inflation by making the cost of important goods more expensive. However, she said that Handelsbanken expects the krone to strengthen in the near future.
Midtgaard added that it was possible that Norges Bank would choose to take the key policy rate up to four percent if the situation didn’t improve.
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