2016-03-17wsj.com

The central bank, known as Norges Bank, cut its main rate to 0.5% from 0.75%, in line with the expectations of analysts polled by The Wall Street Journal. The Norwegian krone strengthened against the euro in response to the decision, suggesting the move was slightly less aggressive than markets had expected.

Norges Bank said it may need to lower the main rate again this year and didn't rule out taking the main rate to zero or even below in the event of a severe economic setback. [But] Like its peers in Sweden and Denmark, Norges Bank has long expressed concern that low interest rates could push house prices and household debt to dangerous levels, which could destabilize the economy in the event of higher interest rates or a downturn by making it harder for borrowers to meet the terms of their loans.



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