Norway keeps rates at zero, outlook stronger than expected

The mainland economy, which excludes oil and gas output, is now expected to contract by 3.5% this year, better than a May forecast of a 5.2% drop. In 2021, Norges Banks expects 3.7% growth compared to a 3.0% expansion seen last month. Norway's crown currency strenghtened to 10.66 against the euro at 0807 GMT from 10.72 just ahead of the 0800 GMT announcement.

Norway's central bank kept its key policy interest rate on hold at a record low zero percent on Thursday, as expected, and said economic prospects had improved more than anticipated in recent weeks.

Norges Bank has cut rates three times since March, slashing the cost of borrowing from 1.5% to cushion an economy reeling from the COVID-19 pandemic and the fall in the price of crude oil. "Since the monetary policy meeting in May, activity has picked up faster than expected," the central bank said in a statement announcing the unanimous decision of its monetary policy committee.

"The policy rate forecast implies a rate at the current level over the next couple of years, followed by a gradual rise as economic conditions normalise," it added. The mainland economy, which excludes oil and gas output, is now expected to contract by 3.5% this year, better than a May forecast of a 5.2% drop. In 2021, Norges Banks expects 3.7% growth compared to a 3.0% expansion seen last month.

Norway's crown currency strenghtened to 10.66 against the euro at 0807 GMT from 10.72 just ahead of the 0800 GMT announcement.