Central Banks

Central bankers ‘worry’ about a trade war between China and US, says Norges Bank’s Olsen

Key Points
  • Norway's central bank governer said he has concerns over a trade war.
  • Oystein Olsen said he expected "major mistakes of the 1930's" to be avoided.
  • He added that he expected to raise Norway's main interest rates after this summer.
Common sense will mean that we avoid trade mistakes of 1930s: Norges Bank Governor

The governor of Norway's central bank has said that global trade tensions are giving him cause for concern.

The U.S. president Donald Trump ignored warnings of a damaging trade war with China on Thursday, vowing an additional $100 billion of tariffs. Trump originally asked for $50 billion worth of Chinese goods to be punitively taxed, but has now doubled-down after Beijing threatened its own levy on 106 US produced items.

Oystein Olsen, governor of Norges Bank, told Squawk Box Europe on Friday that there was some alarm at the tit-for-tat exchanges between the world's two biggest economies.

"I think I join most economists around the world, especially governors of central banks, in saying that, yes, this is a worry," he said.

Olsen said he believed that common sense would prevail between the two powers and that the "major mistakes of the 1930s" would be avoided.

Olsen added that he would not take a stand on the current trade spat but was optimistic that the Chinese were becoming better at adopting international trade rules.

"Gradually, I think, my view is that China step by step moves in the direction. It has taken time and U.S. authorities have been impatient, but now I think things are turning around," he said.

Norwegian economy

Likely interest rate increase after the summer: Norwegian central bank

Norway's economy is heavily reliant on North Sea oil, meaning recent oil market volatility has been a concern for the economy. Olsen told CNBC that oil prices had stabilised at a comfortable level for the country and that he expected them to sit at around $60 a barrel.

The central bank of Norway left its key policy rate unchanged at a record low of 0.5 percent on March 15, in line with market expectations.

The country has not witnessed a rate rise since 2011 but Olsen said Friday that he expected domestic interest rates would rise "after summer."

The central banker said growth has a firm footing in Norway and he was witnessing a more positive outlook internationally.