COPENHAGEN, Denmark (AP) — Norway’s central bank has cut its key policy rate by a quarter percentage point to 0% as the economy is slammed by the combination of the coronavirus pandemic and a recent plunge in the price of oil.
“The uncertainty surrounding developments ahead is unusually high,” Norges Bank added Thursday. “Economic activity is expected to pick up as containment measures are eased, but it will likely take time for output and employment to return to the levels prevailing before the pandemic.”
The bank’s governor said the policy rate will likely remain at zero for some time.
Besides the pandemic, which has hit economies around the world as governments put restrictions on business, Norway has been hurt by a slide this year in energy prices. Norway is a big exporter of oil and gas, the price of which has halved this year.
Last month, the Norwegian government said it will reduce its off-shore oil production to contribute to a global stabilization of the oil market.
Norway would cut production by 250,000 barrels per day in June and by 134,000 barrels per day in the second half of 2020. The start-up of production of several fields will be delayed until 2021.