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Norway's central bank cuts key rate to 1.0%

Norway's central bank on Friday cut its key interest rate and began offering cheap loans to banks as it moved to soften the economic blow to the country from the double whammy of the coronavirus and plunging oil price.

7073彩票注册Norges Bank cut its key rate to 1.0% from 1.5%, saying it expects near-term activity in the Norwegian economy to decline considerably due to the coronavirus outbreak.

Many companies are feeling the negative effects, with layoff notices already being issued and unemployment expected to rise. Economic prospects of the oil-dependent country have also weakened on the back of the sharp fall in oil prices.

"There is considerable uncertainty about the duration and impact of the coronavirus outbreak, with a risk of a pronounced economic downturn," the central bank said in a statement.

"The committee is monitoring developments closely and is prepared to make further rate cuts."

7073彩票注册Although a lower policy rate cannot prevent the coronavirus outbreak from having a substantial impact on the Norwegian economy, it could dampen the downturn and mitigate the risk of more persistent effects on output and employment, it said.

In addition to the rate cut, Norges Bank said it will offer extraordinary three-month loans to provide liquidity to the banking system.

7073彩票注册The so-called F-loans will be offered for as long as is deemed appropriate and are being offered to ensure that the policy rate passes through to money market rates, it added.

7073彩票注册The interest rate on the F-loan is the policy rate prevailing at any time.

In a seperate release, Norway's Ministry of Finance said Friday that it has moved to adopt a Norges Bank recommendation by immediately reducing the countercyclical capital buffer requirement from 2.5% to 1% to prevent tighter lending standards.

"The buffer requirement is reduced to prevent tighter lending standards from amplifying a downturn," the ministry said.

7073彩票注册Write to Dominic Chopping at dominic.chopping@wsj.com

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