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New bank boss warns higher rates

Øystein Olsen, the 58-year-old head of state statistics bureau SSB, was confirmed at the weekly Council of State on Friday as the new head of Norway’s central bank, Norges Bank. He warned Friday night that interest rates could more than double over the next several years.

Øystein Olsen is Norway's new central bank boss. PHOTO: SSB

Norwegian Finance Minister Sigbjørn Johnsen called Olsen a “knowledgable economist with broad insight.” Olsen had long been viewed as the favorite for the post, with local media reporting for weeks that the finance ministry had decided he was their top choice to lead the central bank for the next six years. Current central bank boss Svein Gjedrem will reach the end of his second six-year period at the end of the year.

Olsen was said to have had only one serious rival for the job, Knut Kjær, who emerged as an applicant in September. Kjær had a successful period as head of Norway’s so-called Oil Fund (the state pension fund fueled by oil revenues that’s the second-largest and recently ranked as the most respected in the world). The oil fund is an important part of the central bank’s operations.

Newspaper Aftenposten reported last month, though, that analysts ranked Kjær just behind Olsen in terms of Norwegian and international economic analysis and in forming economic policy. The central bank is charged with analyzing, surveying and making prognoses for the Norwegian and international economy as well as setting monetary policy. It sets interest rates every sixth week and Olsen is well-equipped for the job after his years working not just for the statistics bureau but also for the finance ministry itself, in its economics division.

“If Olsen hadn’t applied for the position, I would have thought that Kjær was an excellent candidate with his background in economic analysis, capital management and a leadership role in an area between profession and politics,” chief economist Øystein Dørum at Norway’s biggest bank, DnB NOR, had told website “But Olsen did apply, and seems to have been asked to apply. That alone puts him ahead of the other applicants. And in total, he’s the stronger candidate of the two.”

Olsen received most of his education at the University of Oslo but has also done research at the University of California at Berkeley. He was a professor at the Norwegian School of Management, BI, in the 1990s.

Olsen said he was “happy, excited and humbled” by his appointment. “It’s a new and different job than those I’ve had earlier,” he said at a press conference in Oslo on Friday. “I’m going from an important producer of facts (SSB) to an important decision-maker (Norges Bank).”

He appeared Friday night on NRK’s nightly newscast Dagsrevyen and declined to make any specific interest rate predictions, knowing that from now on, any utterance on his part can move markets.

Olsen noted, though, that the central bank itself already has warned that rates will likely climb over the next three years. He warned that especially young borrowers need to be aware that “interest rates could more than double” in the coming years.

He’ll assume his new post on January 1.

Views and News from Norway/Nina Berglund
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