Norway's Interest Rate Surprise: Central Bank's Unexpected Move

Norway's central bank reduced its policy interest rate by 25 basis points to 4.25%, the first cut in five years. The move, which surprised analysts, comes amidst an uncertain economic outlook and a decline in inflation. Further rate reductions might follow if economic projections hold.

In a surprising move, Norway's central bank reduced its policy interest rate by 25 basis points, setting it at 4.25%. This marks the first such reduction in five years and comes as a surprise to many analysts.

The bank's statement highlighted economic uncertainty, suggesting that should current projections hold, further cuts could occur in 2025. Following this announcement, the Norwegian crown weakened against the euro, hitting 11.55 from 11.48 earlier.

Norges Bank had previously maintained its rate at 4.50%, citing a rise in consumer prices. However, inflation has since declined, prompting this cautious approach to normalizing the rate aimed at stabilizing inflation without hindering economic growth.

(With inputs from agencies.)