OSLO, June 23 — Norway’s central bank left its benchmark rate unchanged at a record low amid signs the economy of western Europe’s biggest oil producer will narrowly avoid a recession thanks to record fiscal and monetary stimulus.
The rate was left at 0.50 per cent, as forecast by 14 of 15 analysts surveyed by Bloomberg. “There are still prospects that the key policy rate may be reduced in the course of the year,” Governor Oeystein Olsen said in a statement.
Norway, while battered by the collapse in oil prices, has managed to avoid the negative rates and unconventional polices that dominate elsewhere. The government is spending a record amount of its petroleum wealth and successive rate cuts over the past years have weakened the krone, helping non-oil exports.
Key indicators are signaling a bottom may have been reached for the economy, which has lost thousands of oil industry jobs. A report yesterday showed unemployment held at 4.6 per cent in April, beating an estimate for 4.7 per cent. A survey from the central bank earlier this month suggested companies are becoming more positive in their outlook for production.
In an interview on Wednesday, Prime Minister Erna Solberg said the economy is “showing some positive signs and that unemployment is going down slightly” while warning that the “developments are fragile.”
Rising along with the oil price, the krone has strengthened by about 3 per cent on a trade-weighted basis since January. The price of Brent crude has gained 80 per cent since January, though still at a level where big new offshore investments are hard to justify. — Bloomberg
