Consumer spending unaffected by high interest rates

Higher interest rates are generally intended to discourage consumption and encourage saving.

Yet, the historically high interest rate hikes in the past year do not appear to have affected household spending in the Faroes.

“Our unemployment rate is at a record low, our wage expenditures and our exports continue to grow, and credit/debit-card transaction figures are higher than last year,” says national bank director Malan Johansen.

“Households continue buying goods and services despite the rising prices. This is probably because most people are in employment, and those who might be worried about losing their job know they can easily find another job.”

Read the Faroese version of this article here.

More Faroese News in English.