Norges key policy rate dropped to 1.25%
18 June 2009
Norway's central bank cut its main interest rate by a quarter point to a record low of 1.25 percent, signaling the end of its steep eight-month easing cycle and forecast a gradual pick up in economic activity.
Norges Bank charts in a new monetary policy report suggested that rates have bottomed out and that the bank expected to begin tightening policy in the second quarter of 2010. Deputy Governor Jan Qvigstad confirmed to a news conference that the bank's forecast for rates ahead, known also as the rate path, indicated that rates would begin rising in "late winter", in other words the second quarter of next year. Qvigstad said, however, it was not ruled out that rates could fall further if the global downturn proves to be even deeper and more prolonged than expected. "The main scenario for the Norwegian economy is roughly in line with what we envisaged in March, but the labour market has developed somewhat better (than expected)," he said.
The bank said the deposit rate would stay in a range of 0.75-1.75 percent until its next monetary policy report in late October.