Olsen builds protection against low oil prices – Aftenposten

Olsen builds protection against low oil prices – Aftenposten

Handelsbanken awaits rate cuts from Norges Bank on Thursday.

– We expect a rate cut of 0.25 percentage points due significantly weaker outlook for the Norwegian economy, says senior economist Marius Gonsholt Hov.

The brokerage DNB Markets is not entirely agree.

– We believe interest rates will be kept unchanged now, but that Norway Bank will notify a cut before the summer. Oil investments will fall much next year. It will increase unemployment and therefore Norges Bank cut interest rates soon, says chief economist Øystein Dørum.

Governor Øystein Olsen has had enough to think about since he presented its previous forecasts in September:

• The oil price is Norway’s most important award and has fallen from $ 115 per. barrel this summer to just over $ 65 now.
• The long announced drop in oil investment is beginning to seem in the workplace. The pressure in the Norwegian economy has declined and many jobs are in danger. Interest rate cuts can reduce the risks.
• The krone has depreciated 7.6 percent since summer rain against the currencies of Norway’s imports. It gives more expensive imports, which will clearly contribute to higher inflation next year. Higher interest rates may be necessary to slow it.
• People increase their debt in about the same rate as before. Many are vulnerable with high loan. With interest rate cuts will make it even more tempting to borrow.

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Right on target

Wednesday came figures from Statistics Norway showing that Olsen fulfills its primary task with aplomb: Underlying inflation in November was 2.4 percent, calculated in relation to November last year.

In September inflation was calculated in the same way 2 , 5 percent. Olsens Ministry of Finance is to keep it close to 2.5 per cent over time to contribute to predictability and stability in the economy.

Meanwhile struggling many of Olsens colleagues abroad with inflation well below target.

Must balance

Thursday, Norges Bank shall submit an updated plan for its interest rate setting to 2017. In such a plan, the Bank emphasizes three goals: price inflation close to target, low unemployment and customizable with debt in most people.

The goals might take in different directions when interest scheduled to be made.

– I think the prospect of increased unemployment will weigh heaviest. In the longer term drag it in the direction of lower inflation and probably means more than the effect of the exchange rate and more expensive imports. Therefore suggests both the goal of low unemployment and stable inflation that interest rates will soon be put down, says Dørum.

Hov Handelsbanken says much of the same.

– Wage growth will fall and drag inflation down within a few years. Therefore, considerations of both jobs and inflation go in the direction of interest rate cuts now and that interest rates are kept low long, he said.

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Published: 10.des. 2014 3:18 p.m.