Norway's central bank cut its key interest rate to 1% from 1.5% in a bid to alleviate the economic impact from the coronavirus outbreak, and may cut again, it said in a surprise announcement today.
Norges Bank also announced the first of several offers of extraordinary loans to the banking industry and permission to draw down buffers in order to help banks continue lending to companies and individual clients.
"There is considerable uncertainty about the duration and impact of the coronavirus outbreak, with a risk of a pronounced economic downturn," the bank's monetary policy committee said in a statement.
"The committee is monitoring developments closely and is prepared to make further rate cuts," it added.
The bank had been due to announce its next rate decision on March 19.
But under the current circumstances, waiting for another six days was not a real option, said Handelsbanken Chief Economist Kari Due-Andresen, who earlier this week had called on the bank to act.
"The central bank is doing what it can, and they also say that they are following the situation and that they can cut the rate further if needed - and that we expect will be necessary," she said.
The countercyclical buffer of the banking industry will also be cut, to 1% from 2.5%, making it easier for banks to keep lending, a move that was also sanctioned by the finance ministry, Norges Bank said.