– It is a more stimulating state budget than the one Norges Bank based on in its report in September. The government expects growth twice as high as the bank assumed, and higher inflation, says Holvik to NTB.
Thus, she believes a cut in the key interest rate will come in March at the earliest, and perhaps even later.
– In a situation where Norway struggles to lower interest rates, while neighboring countries manage to do so, it is clear that this is one of the explanations. We have the oil fund, and the government uses so much of it in the state budget, she says.
Interest rate cuts may take even longer
The Sparebank 1 top has long said that no rate cut can be expected in November. Now she believes it could take even longer in the worst case scenario.
– What do you think Central Bank Governor Ida Wolden Bache is thinking about today?
– She could probably think of a little more help. But she just has to take politics for granted and do the best she can. And her answer is to keep interest rates slightly higher than previously announced.
Not good news for the krone exchange rate
The government has promised tax cuts to the vast majority of people, but Holvik points out that later interest rate cuts and higher-than-expected price growth could lead to profits going up in the spin.
– Then each individual family has to calculate the pluses and minuses.
She also does not believe that the budget can be good news for the krone exchange rate.
– Norges Bank has long pointed out that an important driver over time for a weak krone is that Norway has weaker productivity growth than other countries. What was needed was measures that lifted productivity growth in the economy.
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