Vaccination and rising house prices drive interest rates – NRK Norway – Summary of news from different parts of the country

On Friday, Statistics Norway presented its report on the economic trends of the Norwegian economy. Recently, it has been characterized by many positive innovations in vaccines.

The main conclusion is that the coronary vaccine is not only positive for public health, but also for the economy as such.

– We assume that a sufficient number of people will be vaccinated, so that infection control measures can be relaxed towards the summer of next year, says Statistics Norway researcher Thomas von Brasch.

– Then it will be as if a switch were activated in the Norwegian economy. The activity will resume. So we also believe that the first interest rate hike will come before next summer, he says.

– The interest rate will be low for a long time.

The report states that it must “get worse before it can get better,” and that it will probably be several months before enough people are vaccinated for infection measures to ease.

However, Statistics Norway is clear that their calculations indicate that Norges Bank will gradually start raising the key interest rate from next summer. The Statistics Norway researcher estimates that the key policy rate will end at 1.0 percent by the end of 2023.

– Remember that the interest rate was one and a half percent this spring. Then Norges Bank cut interest rates by one and a half percentage points over the course of two months.

– We believe that they will increase the interest rate by one percentage point in almost three years. This means that interest rates will be low for a long time, von Brasch says.

DNB: too optimistic

Kjersti Haugland, chief economist at DNB Markets, is not as optimistic as Statistics Norway when it comes to the outlook for the Norwegian economy.

– I do not think that this summer we will return to “business as usual” for companies and consumers.

He points out that there are some expectations that the coronary vaccine must be able to meet in order for the consequences to be felt in the economy.

– So it must be as efficient as things now suggest, and it must be implemented in large numbers. It should also provide massive immunity to the population, something we’re not sure about yet, Haugland says.

She emphasizes that DNB also believes in an interest rate increase, but somewhat later.

– If all those things (related to the vaccine, journal.anm.) Go on strike, and also the growth in house prices continues as fresh as it has been lately, then I think the interest rate can be raised. But then towards the end of 2021, and not until the summer.

Haugland believes that most households will tolerate an interest rate increase.

– It hasn’t been long since the key policy rate was 1.5 percent. Most people should take a rally from here. Mortgage regulations must take into account consumers’ ability to pay, so a 5 percent increase should be tolerated, he says.

Fear the promotion is too late

According to the Labor Force Survey (EPA), unemployment was 5.2 percent measured as an average from August to October. Statistics Norway estimates that the layoffs will gradually return to work.

– According to our estimates, unemployment will decrease as activity increases. Unemployment will fall to just under 4 percent in 2022. This is a more normal level for the Norwegian economy.

17,000 jobs in the nightlife industry in Oslo. Many in the industry fear that the economic recovery will come too late.

Frida Sofie Jansen works as a bartender. She was recently fired for the second time this year and is not looking forward to the winter months.

– We’ve been devastated for quite some time. Now we have fallen to the ice and we have hit each other very, very badly. There is a first aid kit there, but it cannot be opened until April. And in April we may have bled, says Jansen.

– It is fantastic that there is a vaccine, and that we return to normal. But I think the normal will be much poorer when it comes to the soul of the city of Oslo.