Key policy rate cut by 0.50 percentage point

The Executive Board of Norway's Central Bank (Norges Bank) has decided to reduce the key policy rate by 0.50 percentage point to 1.75 per cent, the lowest since May 2010.

“The turbulence in financial markets has intensified and external growth is now expected to be clearly weaker, particularly in the euro area. In order to dampen the impact on the Norwegian economy, the Executive Board has decided to lower the key policy rate”, says Deputy Governor Jan F. Qvigstad.

Quigstad pointed to the fact that inflation is low. Even though activity in the Norwegian economy remains robust, primarily driven by petroleum investment and a high level of housing construction, a number of indicators suggest lower growth ahead.

He said there is a high degree of uncertainty as to economic developments in the coming months. The debt situation in the euro area has led to considerable problems in the European banking system and in money and credit markets. Market funding has also become more expensive and less accessible for Norwegian banks.

“In order to guard against an economic setback and even lower inflation, we are of the view that a reduction in the key policy rate is now appropriate”, the Deputy Governor says.

(NRK/Press release)

Thursday, 15 December 2011 08:35