– I think Norges Bank will raise interest rates by another 0.25 percent next week, but the market believes in double that, says Marius Gonsholt Hov, chief economist at Handelsbanken, and known because he has always guessed correctly about how much Norges Bank will change the interest rate.
See what Hov predicts in the video above, or listen to the podcast Ness at the bottom of the story.
The Norwegian economy remains strong for now. Low unemployment, high inflation, and even the housing market has remained strong measured in nominal, not price-adjusted, prices.
– But we now see that more homes are not being sold, and an overhang of unsold homes is building up, says Hov.
He believes that the result could be a greater fall in house prices than normal this autumn.
– House prices tend to fall in the autumn, but this year this fall may be greater than usual.
He reminds us that in the housing market we can be deceived by nominal prices, the price per square meter is flat. That they have held up well, even increased a little, hides the real picture.
– In reality, price-adjusted, prices are down six percent already, he sums up.
The last time Norges Bank raised interest rates there was criticism from, among others, LO, and recently the respected economist Knut Røed came out and reminded that interest rate increases take time to work, and therefore the central bank should be careful when using them. His message was that “Inflation will probably come down by itself.»
– I believe that the sharpest critics of Norges Bank have been wrong until now. Norges Bank must try to curb inflation, but without damaging the economy too much. So far, they seem to be managing that balancing act.
Listen to the whole episode here:
2023-08-10 16:50:34
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