Path Opens for Faster Rate Increases From Norway’s Central Bank

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The case is strengthening for Norwegian central bank policy makers to soon raise interest rates for the first time in seven years.

Economic growth is accelerating, oil prices are up, unemployment is nearing rock-bottom levels and central banks around the world are starting to withdraw stimulus. At the same time, the government this month decided to lower the inflation target, opening for a faster tightening of policy in the short run.

Read more on target change here

This will likely prompt policy makers in Oslo to signal an earlier rate increase than the current December forecast when they reveal their next rate decision on Thursday. All 24 economists surveyed by Bloomberg say the bank will keep the benchmark rate at a record low of 0.5 percent, where it has been since March 2016.

“It’s more likely that rates will be hiked before December than after,” said Kjersti Haugland, chief economist at DNB ASA, Norway’s biggest bank. “We see a fifty-fifty probability that the rate path this time will indicate a hike already in September.”

The view was shared by SEB AB chief strategist Erica Blomgren, who says the bank will “signal with 100 percent certainty that a rate hike will occur in 2018 and are tilting toward a September lift-off.”