Both private- and public sector economists are predicting a relatively rapid string of interest rate hikes over the next few years. Nordea Markets thinks Norway’s central bank (Norges Bank) will boost rates no less than seven times between now and 2020.
Most economists, analysts and professors have been expecting the central bank’s board to raise rates at its next meeting later this month. Norway’s “key policy rate” has been stable at just 0.5 percent since March 2016, and with the economy in the midst of recovery from falling oil prices, it’s widely considered to be high time to boost it.
State statistics bureau SSB (Statistics Norway) joined Nordea on Thursday in predicting steadily rising rates until at least 2021. Unemployment is already at a low 2.4 percent, overall employment levels are expected to climb, along with wages after several years of stagnation. Higher interest rates are thus viewed as necessary to keep inflation under control.
Predictions call for the key policy rate to rise to around 2.25 percent and mortgage rates to around 4 percent in 2021, still low on an historic basis but higher than now. Higher electricity rates can also take some of the joy out of expected pay raises. The country’s hot real estate market is already cooling off, with average prices up only 0.8 percent in August, and will likely flatten out by 2021.