Norges Bank cut interest rates to a record low and said it may need to ease policy further to avoid a recession in western Europe’s biggest oil producer.
The overnight deposit rate was cut by 25 basis points to 1 percent, the Oslo-based central bank said. The decision was forecast by 16 of 17 economists surveyed by Bloomberg, while one saw no change. The bank signaled another cut may come as soon as September while its rate path shows a low of 0.83 percent by the end of the year.
“The current assessment of the outlook for the Norwegian economy suggests that the key policy rate may be reduced further in the course of autumn,” Governor Oeystein Olsen said in a statement.
After easing policy in December to mitigate the risks of an oil induced slowdown, Olsen kept rates unchanged in March and May, but signaled a 100 percent chance of more cuts by June. A slowdown in Norway is coinciding with a return to extreme measures in neighboring regions. The European Central Bank is buying debt to add to its stimulus, while policy makers in Sweden and Denmark have cut rates well below zero.
The krone slid 0.6 percent to 8.7346 per euro as of 10:26 a.m. in Oslo.