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Friday, May 20, 2022

New central bank boss takes over

Øystein Olsen started his new job this week as the head of Norway’s central bank (Norges Bank) but local economists don’t expect any major changes in monetary policy. Olsen himself has indicated the same, and thinks prospects for the Norwegian economy are good.

Øystein Olsen officially assumed his post as head of Norway's central bank on Monday. PHOTO: Norges Bank

Olsen is already clearly being careful with whatever he says, aware that his utterances can move markets. Asked by business newspaper Dagens Næringsliv (DN) how strong a Norwegian currency local industry can tolerate, he said he had no “specific views” and didn’t want to. Asked how much of an interest rate difference Norway can tolerate in comparison to other countries’ levels, Olsen also was non-committal, saying he didn’t “want to say anything specific about that now.”

He did express optimism for the local economy, and praised recent moderate increases in pay levels. He expressed some concern, though, about rising housing prices, which are predicted to go up another 8 percent this year.

Olsen, age 58, comes to his new, powerful post after many years at Norway’s state statistics bureau SSB, where he was research director and, ultimately, managing director. He also has headed several public commissions and has experience from the private sector as well, after working for analytical company Econ.

Olsen is educated as an economist and is known for being more pragmatic than many of his colleagues, and open to new ways of thinking. Still, no new policies or major changes are expected.

“He comes from the same circles as (his predecessor) Svein Gjedrem,” notes senior economist Kjersti Haugland of DnB NOR Markets. “He helped create the inflation goals that Norges Bank uses. I don’t think we’ll really notice any difference.”

Nor do five other economists interviewed by DN. “It’s not the central bank that decides inflation goals,” said Frank Jullum, chief economist at Fokus Bank. He expects the same flexibility as seen during Gjedrem’s tenure.

Stein Bruun, chief economist at SEB, also expects “continuity.” The next meeting at which interest rate levels will be set occurs on January 26. Most economists predict they’ll remain unchanged, while a slight increase is expected by summer.

Views and News from Norway/Nina Berglund
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