The newspaper online: A total of 14 rate hikes were needed before central bank governor Ida Welden-Basz would re-raise rates – so far.
By then, we had reached 4.5 percent, which most people noticed with their meager wallets.
Although the spring sun is rising nicely now, there is little good news about interest rates for first-timers. A weak Norwegian krone means your mortgage interest rate will likely remain high for some time to come.
“The krone exchange rate remains weak, and the Bank of Norges will likely have to postpone its first interest rate cut until the first quarter of next year.”
This is what Handelsbanken Capital Markets wrote in a recent report released on Wednesday.
The Bank of Norway has said the first rate cut will come later this year, but the big bank now expects the cut to take place only next year.
The interest rate has therefore been at 4.5 percent since December, while the interest rate on mortgages to households has risen for both existing and new loans. From February to March 2024, according to Statistics Norway.
They stand neutral
– We expect a total of five interest rate cuts throughout the forecast period, and therefore envisage a policy rate of 3.25 percent at the end of 2026, they write further.
Considering the krone exchange rate means that the Bank of Norway still has to “wait” for other central banks, such as the Federal Reserve in the USA and the European Central Bank.
The interest rate on new mortgages for households in Norway rose from February to March By 0.05 percentage points to 5.71 percent. The interest rate on outstanding mortgages rose by 0.03 percentage points to 5.73 percent in the same period.
– Strengthening against the euro
“The Norwegian krone has left behind three consecutive weeks of strength against the euro, which is likely due to increased confidence in the more wait-and-see Norwegian bank compared to other leading central banks,” she says.
In the US, the market now mostly believes in the idea of a “soft landing”.
At the same time, the US dollar maintained its strength compared to what it was six months ago. The krone exchange rate also changed little during this period, while the negative variation against the US dollar has been historically strong.
We believe in a stronger Krone
Handelsbanken believes that in line with the strength of the krone, the dollar will fall “when interest rate normalization gains a foothold among leading central banks.”
In the United States, the economy is moving very quickly, which means that the US Central Bank (FED) will not cut interest rates until September.
One euro costs 11.59 Norwegian krone on Wednesday morning, while one dollar costs 10.68 Norwegian krone.
She's had a bit of a jump lately Encouraging inflation numbers from the United Statesbut it is much lower than the level it was a few years ago.
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