Norway’s central bank (Norges Bank) kept its key policy rate at 0.0 percent on Thursday amidst unusually high economic uncertainty. It all depends on what happens with the Corona pandemic and how both businesses and households deal with it.
Norges Bank Governor Øystein Olsen said the bank’s own evaluation of the economic outlook and risk situation indicates interest rates will remain at historic rock-bottom levels “for some time ahead.” Even though the pandemic led to a sharp downturn in the Norwegian economy, business and purchasing activity has “picked up faster than expected,”the bank stated in a press release Thursday.
That’s at least in part tied to low interest rates, which are speeding up the return “to more normal output and employment levels.” The goal is to prevent unemployment from becoming “entrenched at a high level” and of inflation becoming too low. Low interest rates are thus expected to prevail for the next couple of years, according to the central bank.