Economics

Norway Delivers Shock Rate Cut to 0% Amid Worst Slump Since WWII

Norway Cuts Rates to 0%, Warns of Worst Contraction Since WWII

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By Mikael Holter

May 7, 2020 at 4:06 AM EDT

Updated on

May 7, 2020 at 5:41 AM EDT

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The central bank of Norway delved into uncharted territory on Thursday, cutting its main interest rate to zero and predicting the worst economic contraction since World War II.

The quarter-point rate cut was only expected by two of the 21 economists surveyed by Bloomberg. Norges Bank said the severity of the Covid-19 crisis and the historic plunge in oil prices meant the extreme policy response was needed. It expects Norway’s fossil-fuel-reliant economy to contract more than 5% this year.