Tore Vamraak at Sparebanken Sør wanted an interest rate hike from Norges Bank, and got it. He is still not satisfied.
Tore Vamraak at Sparebanken Sør is afraid that price inflation will be high. Photo: Eirin Fidje / FædrelandsvennenPublished: Published:
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Norges Bank decided on Thursday in a somewhat surprising way to raise the key interest rate further to 4.5 per cent.
In advance, most chief economists had doubted that the central bank would keep the interest rate unchanged at 4.25 per cent.
Chief economist Tore Vamraak at Sparebanken Sør, for his part, believed that another increase would be wise. A couple of days before the decision, he came out with a desire for both an increase and a clear signal that the interest rate peak has been reached.
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– “The Chief Economist Against the Current” was right?
– Heh heh heh. Erm. I’ll be careful to say that, because as the article said, I gave my opinion on what would be wiselynot what I thought they would do, says Vamraak.
– Disappointing
The chief economist’s desired interest rate hike came, but central bank governor Ida Wolden Bache did not clearly state on Thursday that the interest rate peak has been reached.
Although Norges Bank wrote that the interest rate probably is close to the level to bring down inflation, it was also not ruled out that the interest rate could be set further opp.
– It is disappointing that they did not signal that the interest rate peak has been reached. I believe it is absolutely necessary for the industries that are struggling the most, namely the construction industry and partly the trade, says the chief economist.
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Wolden Bache said that if cost growth remains high or the krone weakens more than forecast, the central bank is prepared to raise interest rates further.
– She keeps the possibility of raising the policy rate, and I think that is unnecessary. Everyone understands that if new information comes in, Norges Bank will assess it. Now more uncertainty is created, says Vamraak.
Norges Bank signaled at the interest rate meeting in November that there would probably be another increase in December. Several of the chief economists finally concluded that there would perhaps be no change in the key interest rate, after holding a button on raising interest rates for a long time.
Still high inflation
The latest inflation figures from Statistics Norway came in on Monday this week, just a few days before the interest rate decision.
Core inflation, which Norges Bank emphasizes the most, ended at 5.8 per cent in November.
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That is well above the central bank’s inflation target of 2 percent, which Vamraak used in his justification earlier this week.
– Even if it was not clearly stated that the interest rate peak has been reached, was it still right to raise the interest rate?
– Yes, I still think that it was right in the situation we are in. We have inflation that is too high, with the risk of it taking hold with high inflation and high wage growth. We also have a weak krone exchange rate and a reassuringly low unemployment rate, says Vamraak.
2023-12-16 14:11:07
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