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Norway cut its key interest rate

Wednesday, 14 December 2011
The Norwegian central bank, Norges Bank has lowered its key rates by 50 basis points on Wednesday, reports the news agency TDN Finans. Sight deposit rate is thus 1.75 percent  as against 2.25 percent.
According to Bloomberg News survey 10 out of 17 surveyed economists had said that  Norges Bank would cut interest rates by 25 basis points to 2.00 percent, while two expected a cut of 50 basis points to 1.75 percent five believed that interest rates would remain unchanged for 2.25 percent.


Interest rates were approved last May 12, 2011, when they were increased by 25 basis points.
"To guard against a backlash in the economy and even lower inflation, we believe it is right to cut to the policy rate now, "said Deputy CEO Jan F Qvigstad in a statement.

Norges Bank notes that the effects of the financial market turmoil have increased uncertaity, and the bank now expects”clearly weaker” developments abroad, particularly in the euro area.

Qvigstad also notes that the Norwegian inflation is low, and although activity in the Norwegian economy remains up, it is suggests that there are various indicators of lower growth in the future.

"There is considerable uncertainty about economic developments in the coming months. The debt situation in the euro area has led to significant problems in the European banking system and the money and credit markets. Market financing has become more expensive and less available also for Norwegian banks, ” writes Qvigstad.
By Team

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