Norway Central Bank Maintains Key Rate at 0.75%

  • Norwegian currency climbs against all 16 major peers
  • Central bank policy makers held rate at 0.75 percent

Norway’s krone jumped from a 13-year low against the dollar after the nation’s central bank kept interest rates unchanged.

The currency climbed by at least 0.8 percent versus all 16 major peers after the decision. While the majority of economists surveyed by Bloomberg predicted the Norges Bank would keep its overnight deposit rate at 0.75 percent, seven of the 20 had forecast a cut to 0.5 percent.

Central bank officials also signaled they are prepared to ease policy further as they seek to keep western Europe’s biggest crude producer out of recession amid a plunge in oil prices for crude traded in New York to the lowest level in almost seven years.

“The krone was very weak coming into this meeting on the fear that this was going to mean a collapse of Norwegian rates,” said John Hardy, head of foreign-exchange strategy at Saxo Bank A/S in Hellerup, Denmark. “The market had priced in a lot more fear than was perhaps necessary. There are further risks to the downside for the krone if oil continues lower.”

The Norwegian currency strengthened 0.9 percent to 8.6802 per dollar after touching 8.8335, the weakest since 2002. It appreciated 1.4 percent to 9.4219 per euro, the biggest one-day advance since August.

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