Norges Bank cuts its Key Policy rate to 0% vs. Exp. 0.25%; decision unanimous; Does not envisage making further policy rate cuts

• “In the Committee’s current assessment of the outlook and balance of risks, the policy rate will most likely remain at today’s level for some time ahead. We do not envisage making further policy rate cuts”, says Governor Øystein Olsen.


• Economic activity is expected to pick up as containment measures are eased, but it will likely take time for output and employment to return to the levels prevailing before the pandemic.


• Activity in the Norwegian economy has fallen sharply owing to the coronavirus outbreak.; The sharp global downturn has led to a marked contraction in global oil consumption and low oil prices. Total oil production is substantially higher than consumption, with little spare storage capacity. Against this background, oil prices are likely to remain low in the coming period.


• Link


• Norges Bank has extended the period that extraordinary NOK F-loans will be offered to the end of August 2020, with some changes as to which maturities are offered and when the different maturities will be offered after 29 May, Link
  

Regarding the projections below:

• In Alternative 1, activity rapidly picks up again, and unemployment shows a marked fall 


• 
  Alternative 2, the downturn in the Norwegian economy becomes deeper and longer than in the baseline scenario.

Reaction details (09:10)

• In an immediate reaction to the unexpected rate cut by the Norges Bank, EUR/NOK spiked higher from 11.0720 to 11.1938. EUR/NOK then retraced some of the initial move with communications from the Bank suggesting that this is a "one and done" move.

07 May 2020 - 09:00- ForexImportant- Source: Newswires