Chief economist revises rate of interest cuts forecast, predicts stronger wage development

The chief economist initially believed in 4 rate of interest cuts this 12 months, however now believes there shall be solely two. Earlier than that, he believed that the coverage price will fall to three.5 p.c throughout the 12 months. Now he thinks will probably be 4.0 p.c.

In different phrases, Den Danske Financial institution’s Frank Jullum has grow to be extra determined.

– We should acknowledge that we’ve got overestimated the contribution of the events in working life to controlling inflation, writes Jullum in his latest forecast report. it was Fingal who talked about this primary.

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Altering wage development

So it’s the good wage preparations that may mitigate rate of interest cuts based on the main economist. He fears that the events in working life is not going to have in mind worth will increase in the identical manner as they did earlier than.

He believes wage development subsequent 12 months shall be stronger than anticipated. It adjustments its forecast from 3.5 to three.8 p.c relating to wage development.

Regardless of this, the chief economist believes that there shall be two cuts in rates of interest this 12 months, one in September and one in December.

A joker

A wild card is the labor market. Whether it is too tight, ie it’s tough to catch sufficient individuals, wage development might be even stronger. And with that, costs rise once more. Excessive wage development and weak productiveness development are inflicting Norges Financial institution to concern the inflation outlook.

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– We consider that this concern will lower as inflation decreases, however right here the uncertainty is nice, writes Jullum.

Crone-pessimist

The krone trade price decreased in March and April by 4 p.c. By way of Might, it has strengthened.

– Nevertheless, we’re nonetheless involved that financial growth might weaken over the 12 months, and no less than see the prospects for a powerful cyclical restoration as comparatively restricted, warns Jullum. He believes the krone will stay “comparatively weak” all year long.