Norway Credit Growth Slows in April to Ease Pressure on Rates

Norway’s credit growth slowed in April for the first time in five months, easing pressure on the central bank to raise rates.

Credit growth was 6.7 percent in April, slowing from 7 percent in March, the Oslo-based statistics agency said. Economists had forecast growth of 7 percent in April, according to the median of five estimates in a Bloomberg survey. Household credit growth was 6.8 percent in April.

Norway’s central bank left its benchmark interest rate unchanged at the lowest in two years last month as policy makers show greater determination to curb krone gains than to cool the country’s overheated property market. Low borrowing costs and falling unemployment have boosted household credit growth, pushing house prices to records.

“The slowdown in household credit growth should be welcome news for the central bank which faces pressure to raise rates in the face of strong domestic growth and higher-than-expected wage growth,” said Ida Wolden Bache, an economist at Svenska Handelsbanken AB, in a note to clients. “That said, today’s figures are unlikely to have a strong impact on the immediate interest rate decision.”

The krone was little changed at 7.5949 per euro as of 11:44 a.m. in Oslo.

The country’s financial regulator has warned that the surging housing market is the biggest threat to the economy. Near-record low interest rates and falling unemployment boosted home prices almost 30 percent since 2008, according to the Norwegian Real Estate Brokers Association.

The statistics agency said there was “some uncertainty” in the data due to reclassification.

To contact the editor responsible for this story: Stephen Treloar at streloar1@bloomberg.net

To contact the editor responsible for this story: Jonas Bergman at jbergman@bloomberg.net