Weak retail sales in Norway to delay rate hikes

Norway climate paper finally publishedSlow consumer activity in Norway is likely to further convince officials to delay the interest rate increases planned for 2013.

According to the latest figures from Statistics Norway, growth in the sale of retail goods increased by only 0.2 percent in November, despite experts having forecast a 0.9 percent increase in one of strongest economies in the European region.

Now, experts say that the sluggish performance – which comes alongside an unforeseen rise in unemployment and slowed manufacturing – will prompt the country’s financial oversight to postpone raising Norway’s main rate. The government had been looking to increase interest rates in order to tame an influx of investments in the oil industry and the much sought-after housing market, according to a Reuters Report issued on Wednesday (9 January).

Ida Wolden Bache, an analyst from Handelsbanken, told Reuters, “The central bank has predicted rates will rise some time between March and September; they won’t be in a hurry to hike after these numbers.”

Similarly, Kyrre Aamdal said on behalf of Oslo-based DNB, “We think that the central bank has overestimated private consumption, and growth in the economy is going to be weaker, partly because of the private consumption.”

He added, “We [think] interest rates will stay unchanged for a longer time… sometime into 2014.”

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