Norges Bank with graph showing an interest rate below zero – Dagbladet.no

(Financial Newspaper): Thursday cut Norges Bank key rate to 1 percent and opened for even a cut in the autumn.

Norges Bank’s fan chart of future interest rate path, however, show a certain probability of negative interest rates over the next few oar e writes Finansavisen today.

– How much do you estimate the probability?

– I would not quantify the likelihood that interest rates come down as far. Then very much happen in and around the Norwegian economy, says Governor Øystein Olsen said.

– The outlook for the Norwegian economy is very different from other countries. Unemployment is low. We have room for maneuver in fiscal policy, without debt, the central government. We still have room for maneuver in monetary policy. We have not at all considered the type of measures such as our neighboring countries have adopted, he added.

– Very unclear

– There is something parodic over the whole thing. I think it appears to be very unclear how one should understand the interest rate path and probability fan, says fixed income manager Torgeir Høien in Skagenfondene Finansavisen.

– Norges Bank must make up their belief and courage to put in print what they think about the likelihood of a interest rates below 0 percent. The probability zero, or is the 30-50 percent who fan apparently shows?

If Norges Bank believes that the fan is not suitable for numerical estimates of various outcomes, they must take the consequences of it he recommends.

– They must rethink whether these fans have a purpose. The alternative is to cut them out. As I interpret Olsen, gives the illusion of quantification as they do not hold. I understand it: The world is perhaps too uncertain to have a fan, he said.

Høien mean reaction function of Norges Bank has become more difficult to understand.

– It has been difficult to understand the next move in monetary policy. It is perhaps a consequence of Norges Bank has steadily more targets, says Høien adding that he has a feeling that Norges Bank under Olsen every day asking about what they will find on today.

Høien also think that the uncertainty about how the Bank responds to new data unfortunately has increased under Olsen.

– I mean Norges Bank has had poor communication long and it were no better today. Being able to have a clear answer for the hand of the possibility of negative interest rates should have been obvious when Olsen signaling that the next move probably is cut to 0.75 percent, he said to the newspaper.

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