Norway’s central bank kept its key policy rate unchanged at 0.75 percent on Thursday, amid international and some local stock market turbulence and a weakening krone. The executive board of Norges Bank saw no reason to boost rates further, nor did most Norwegian economists.
Not a single member of Norwegian newspaper Dagens Næringsliv’s panel of economists had recommended another interest rate hike, not even a modest one like the quarter-point increase announced last month. That was the first interest rate hike for two-and-a-half years, and it came based on Norway’s economic recovery from the oil price collapse in 2014. On Thursday, the bank board maintained its evaluation that Norway’s economy is continuing to grow and is now “near a normal level.”
Meanwhile, the Oslo Stock Exchange’s main index fell at the start of trading on Thursday but not a much as stock markets in the US and Asia. The Oslo exchange’s index was down 1.19 percent by mid-morning, even after Norway’s biggest company, state oil company Equinor announced its best results since the oil crisis began. Equinor’s third-quarter operating profits of nearly NOK 40 billion (USD 4.8 billion) are based largely on the results of heavy cost-cutting at Equinor (formerly Statoil) along with the recent rise in oil prices that topped USD 80 a barrel during the past week. On Thursday, though, oil prices had sunk again, down to USD 75 for a barrel of Norway’s North Sea crude oil by mid-morning.
Norway’s recently volatile currency, the krone, has been weakening despite the country’s economic recovery. Some analysts contend the krone should be stronger given Norway’s economic fundamentals, but it’s often affected by the oil price. When it drops, so does the krone, which was trading at NOK 8.33 to one US dollar on Thursday morning. It cost just NOK 6 to buy a US dollar before oil prices sunk four years ago.