Norges Bank does not change the key interest rate in August, but it does announce an interest rate hike in September. In this case, it will mean more expensive mortgages.
Norges Bank announced its latest interest rate decision on Thursday. It became clear that the central bank was keeping the main interest rate at zero, as expected.
Norges Bank previously announced that the interest rate hike would take place in the second half of 2021.
- As we now assess the outlook and the risk picture, the key interest rate will most likely be raised in September, says governor Øystein Olsen.
This affects mortgage loans
In short, the key issue is the interest rate banks receive from their deposits at Norges Bank. Low interest rates indicate that things are not doing so well in the Norwegian economy, while high interest rates indicate that things are better.
Making changes to the key interest rate is one of Norges Bank's most important tools to control the Norwegian economy, and it also directly affects us all.
When the principal rate of interest is raised or lowered, there is often a shift in mortgage rates.
March 13, 2020 Norges Bank raised its main interest rate from 1,5 percent to 1 percent, and a week later the interest rate was adjusted to 0,25 percent. On May 7, 2020, Norges Bank reduced its key interest rate to a historically low level of zero percent.
Constant uncertainty
At the August meeting on interest rates, the Monetary Policy and Financial Stability Committee Norges Bank unanimously decided to keep the base interest rate at zero.
“The economic development was more or less as estimated in the June report. The reopening of society resulted in a marked increase in activity and unemployment continued to decline. At the same time, there is still uncertainty about the further course of the pandemic and its impact on the Norwegian economy, ”writes Norges Bank in the justification.
The Central Bank continues to write that high vaccination rates reduce the need for infection control measures, but it still cannot be ruled out that new variants of viruses will require a new tightening.
Core inflation has slowed down and is below the two percent target. Increased activity in the Norwegian economy indicates that inflation will eventually pick up.
