Chief Economist fears more interest rate cuts – Aftenposten

This week’s question is a regular column in Aftenposten Sunday magazine Economy and careers. Where we ask economists what has characterized the week.

– That interest rate is back down are ominous. This means that our economy is not particularly strong, and that we need an extremely low rate to make the wheels go round. Other countries have also cut to zero, but it has usually happened after the crisis has become a reality, after the financial sector has collapsed, while in Norway has a kjempelav interest even before the economy has been weak.

– What is it that is so ominous, really?

– Credit growth is too high, house price inflation is moving too fast. It gives me a sense Uggen that we still need to have low interest rates today. And it is bad news that Norges Bank believes that we might have to cut interest rates further in the future.

– And what do you think will happen next in the Norwegian economy in the future?

– I think unemployment will rise further. I think Norges Bank underestimate unemployment in the future. The effect of the decline in the oil sector will probably be felt in many other sectors for a long time to come.

– Will housing prices continue to grow into the sky with such a low rate?

– Now there has been a decline in house prices in the southwestern part of Norway in the past, and inflation has slowed in many other places. There is a risk that rising unemployment may also affect the housing market for the country overall. But normally takes people unnecessarily large risk when there are so low interest rates.

– Is the interest rate so low that it is pointless to put money in savings?

– Well, it’s been easier to save for those who have debts – it is important to remember that debt repayments are also savings, and I would recommend people to pay down as much as possible on its debt now. But many should now think about investing differently. In England in the 1800s, they had a saying that said “John Bull tolerate everything except 2 percent …”

– What do you think about the government’s austerity measures when it comes to the ability to get mortgage ?

– I think it’s very good that they tighten lending now, and they could well tightened a little more.

– How?

– I think banks have received little flexibility to deviate from the standards that are set.

– You say that it is very special that a countries where there has been no financial crisis has such a low rate …

– It is an exciting experiment that we have such a low rate before there is talk of a crisis in the economy. Historically this is indeed uncharted territory.

Published: 19.jun. 2015 7:02 p.m.