– More expensive for people and companies – E24

The chief economist has no confidence in ultra-low interest rates in the coming years.

One question economists ask themselves is how high an interest rate must be in order to not have a restrictive or expansionary effect on the economy. This is called neutral interest.

– The market believes in a slightly higher neutral interest rate than previously, says chief economist Tore Grubeck-Vamrak at Sparebanken Sør to E24.

The central bank's estimate of the neutral interest rate level does not directly affect the interest rate. However, it is important because it is part of the assumptions when determining the interest rate path.

The neutral interest rate is important to Norges Bank's outlook, and shapes the view on where interest rates are headed.

He says: – I have no confidence in a very low neutral interest rate in the long run.

Today, the long-term neutral interest rate is about 2.75 percent, according to FAMrack. It is believed that an upward revision to neutral interest rate expectations will reflect the following:

– It will be more expensive for people and companies, he says.

We expect the revised interest rate to path upward

On Thursday, the stage is set for another interest rate meeting at Norges Bank. A clear majority expects no change in interest rates, although some have warned that there is little possibility of a rate hike.

In the interest rate path, which shows expectations about the direction in which the key interest rate will head in the future, we can find signs that the neutral interest rate has been revised somewhat upward, according to Famrak.

– I expect Norges Bank to adjust the short side of the interest rate upward. With good wage settlements and a revised national budget that was more explosive than most people imagined. In addition, there are better prospects abroad, whether in the United States or Europe, he says.

We may also see a slight increase at the opposite end of the interest rate path:

He says: – I do not ignore the fact that the Bank of Norway will adjust the long-term interest rate to a slightly higher level.

Higher interest for longer period

Although economists disagree on the date of the first interest rate cut, there is agreement that the level will remain high for longer than thought at the beginning of the year.

– In the next two or three years, interest costs will be higher than Norges Bank and most other banks could have borne a quarter ago, says Vamrak.

Chief Economist Kjersti Hoogland at DNB Markets recently noted that the cost picture in Europe is generally rising, and that we may have to live with higher inflation and higher interest rates in the next decade.

– I am not saying that inflation will be ten percent, but I think it will be closer to three percent than two percent.

Chief Economist Ketil Olsen at Nordea Markets also said he thinks we will have to get used to an interest rate close to today's rate for a long time to come.

– Many are now excited about what Norges Bank will say about the possible first interest rate cut. Many have waited a long time, wondering when the sales will come? Rather, we ask ourselves: Will they come?