Norges Bank cuts interest rates by 25 basis points

“The board of the central bank has not considered, the way we see things now, a rate of zero or negative territory”, Olsen added after the bank lowered its key policy rate on Thursday to 0.75 percent from 1.0 percent.

Norges Bank said Thursday that growth was likely to remain low “for a longer period than projected earlier” because of weak oil prices and that oil investments were expected to fall further.

“The bank is increasingly anxious about the impact that low oil prices will have on the economy, having trimmed their growth forecasts for mainland GDP for 2016 and 2017”, said economist Colin Bermingham from BNP Paribas.

“Growth prospects for the Norwegian economy have weakened, and inflation is projected to abate further out”, he said.

In June, the Norges Bank had cut rates and said there was a probability of up to 70 percent of another cut in September if the economy developed as expected. “The board has therefore chose to lower the key policy rate now”.

The euro, meanwhile, held on to its recent gains after the head of the European Central Bank downplayed the need for further monetary stimulus any time soon. Also putting pressure on the Canadian Dollar was unexpectedly soft retail sales figures that were released yesterday.

In order to cut costs, oil companies, including the state-controlled Statoil ASA, have reportedly cut more than 35,000 jobs, pushing the unemployment rate to 4.3 percent in May – its highest level in about a decade.

Nearly half of Norway’s exports are related to petroleum. “We are no longer in a league of our own”, Øystein Olsen, the bank’s governor, said in a press conference following the announcement. Household debt has continued to grow at a faster pace than income. Several industries, not least tourism and the hotel business, are benefiting from the weak krone that takes some of the sting out of Norway’s notoriously high prices, and makes Norwegian goods and services more competitive.