Norwegian economy

Economic Survey 4-2007

Published:

 International financial markets have been unstable since this summer, triggered by the slump in the US housing market. It is uncertain how large and long-lasting the effects on the real economy will be. The American central bank has made a downward adjustment of its growth estimates and cut the interest rate by 0.75 percentage points since September. Increased uncertainty and reduced liquidity in international money markets have prevented a stronger fall in market rates. The players in the money market expect the US interest rate to be cut by around 1 percentage point in the course of the next year. The market rate in the euro area has increased as a result of the liquidity situation although the key rate has remained unchanged. This is somewhat similar to the situation in Norway. In the euro area as well as in Norway, the money market has priced in falling money market rates of around 0.5 percentage points in the period towards next autumn.

Read the whole article: Cyclical developments in Norway in PDF format.