Norway's central bank cuts key rate to record low of 1 pct

Norway's central bank said on Thursday it has decided to lower the key policy rate by 0.25 percentage point to a record low of one percent because of weaker economy developments and outlook.

"Developments in the Norwegian economy have been slightly weaker than expected and the economic outlook has deteriorated somewhat. The Board has therefore decided to reduce the key policy rate now," Oystein Olsen, governor of Norges Bank, was quoted as saying in a press release.

Unemployment in Norway has increased as expected and wage growth in 2015 is set to be lower than projected in March, Norges Bank said, adding that output growth has edged down and enterprises expect growth to remain weak over the next half 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," Olsen said.

In Norway, the key policy rate, also called the sight deposit rate, is the interest rate on banks' deposits up to a quota in Norges Bank. Changes in Norges Bank's key policy rate will normally have a strong impact on short-term money market rates and on banks' deposit and lending rates. Endit