The key interest rate remains unchanged at 4.5 per cent.
– The way we now assess the prospects, the interest rate will probably be kept at the current level for quite some time to come, says Central Bank Governor Ida Wolden Bache.
At the same time, the central bank writes that information the bank now has indicates that there may be a need to keep the interest rate up somewhat longer than the bank previously envisioned.
Uncertain economic outlook
Norges Bank emphasizes that there is uncertainty about the economic outlook.
Since the last report, price growth has been slightly lower than forecast, but at the same time economic activity has been slightly higher than expected, and wage growth may appear to be slightly higher than forecast.
– If we experience a sharper slowdown in the Norwegian economy or there is a prospect that price growth will come down to the target more quickly, the interest rate may be lowered earlier than we envisioned in March, it continues.
No sign of interest rate cuts this year
At the press conference the central bank governor held after the interest rate decision was announced, Wolden Bache said that Norges Bank has not made new forecasts since the last interest rate meeting in March.
– But the information we have received since the last interest rate meeting may indicate that we have to keep the interest rate at today’s level for longer than we imagined then, she says.
When asked if the governor of the central bank envisages cutting interest rates this year, she does not answer specifically, but repeats that Norges Bank has no new forecasts.
– The interest rate will be high for a long time
The interest rate decision is in line with what was expected. Chief economist Kyrre M. Knudsen at Sparebank1 SR-Bank notes that the bank uses the formulation “the interest rate is high enough to bring down inflation”.
– They thus signal that we are at the top of interest rates and tone down the danger of another interest rate jump, he says.
Knudsen interprets Friday’s signals from Norges Bank as meaning that the interest rate peak has been reached, but that it may take time before it is cut.
The analysts at Nordea agree. Chief economist Kjetil Olsen and senior strategist Dane Cekov at Nordea Markets believe that most conditions indicate that interest rates will remain unchanged for longer than expected, with a weaker krone and higher exchange rates abroad.
Great for young people looking for a home
The Norwegian Association of Estate Agents points out that a stable interest rate means lower housing production, which will trigger price pressure in both the housing market and the rental market.
– Our analyzes show rapidly growing differences between the many young people who get help from their parents to buy their first home, and those who are stuck in an expensive rental market without help to scrape together the equity required, says the association’s director Carl O. Geving .
Furthermore, he says that rent is an important component of the consumer price index, and that high rental prices therefore contribute to keeping price inflation high.