Norges bank warn negative rates

Central Bank of Norway, has warned today that it stands ready to act and if required push rates to negative. Norway is the only major Nordic country, which still has a positive rate of 0.5%. Both Denmark and Sweden have cut it deep below negative.

Norges Bank governor, Oystein Olsen said today that economy remains vulnerable to further shocks, which may prompt the central bank to venture into negative.

“When the key policy rate approaches a lower bound, the uncertainty surrounding the effects of monetary policy increases. This suggests proceeding with greater caution in interest rate setting. However, should the Norwegian economy be exposed to new major shocks, the possibility cannot be excluded that the key policy rate in Norway may also turn negative.”

However according to him, Norway is facing no crisis but restructuring. The bank has kept rates steady at May meeting after cutting in March, citing risks of overshooting inflation and robust economic expansion this year.

Norway’s economy remains robust but has been hit hard due to spillover effects from lower oil price that has led to lower investment and exploration in the country.

Norwegian Krone is currently trading at 8.34 per Dollar, down 0.4% today so far.