FOREX TradingCharts.com

Financial News: Norges Bank Cuts Policy Rate In Surprise Move,

Norges Bank Cuts Policy Rate In Surprise Move, Announces Stimulus On Covid-19

03/13/2020 - 04:39:00 (RTTNews)

(RTTNews) - Norway's central bank reduced the key policy rate in an unscheduled move on Friday and said it is ready to lower rates further as it expects a severe hit on the economy from the spread of the coronavirus, or Covid-19.

The Monetary Policy and Financial Stability Committee voted unanimously to reduce the policy rate by 0.50 percentage point to 1.00 percent in an extraordinary meeting on March 12, Norges Bank said in a statement. "There is considerable uncertainty about the duration and impact of the coronavirus outbreak, with a risk of a pronounced economic downturn," the bank said. "The Committee is monitoring developments closely and is prepared to make further rate cuts."

"A lower policy rate cannot prevent the coronavirus outbreak from having a substantial impact on the Norwegian economy, but it could dampen the downturn and mitigate the risk of more persistent effects on output and employment," the bank added.

The country's economic prospects have worsened also due to the recent oil price crash, the central bank noted.

Norges Bank also announced that it will offer extraordinary three-month F-loans for as long as deemed necessary and these will be fully allotted at an interest rate equal to the prevailing policy rate. This is expected to help the policy rate pass-through to the money market rates as there is substantial volatility in the financial markets recently.

Further, the central bank said, following its advice, the Ministry of Finance decided to reduce the countercyclical capital buffer for banks from 2.5 to 1 percent, with immediate effect.

Norwegian banks are solid as they have sufficient capital to absorb losses in the event of a severe downturn, Norges Bank said. "However, tighter lending standards could amplify an economic downturn," the bank added. "A reduction in the countercyclical capital buffer can counteract a tightening of banks' lending standards."

Norwegian banks are profitable, the central bank observed, before urging them to decide on dividend payments only after considering the extraordinary situation facing the country due to the virus outbreak.

Policymakers do not expect to advise the ministry to increase the buffer rate again until 2021 Q1 at the earliest, the bank said. An increase in the countercyclical capital buffer will not be effective until 2022 Q1 at the earliest, it added. Central banks and governments across the world are scrambling to put up monetary and fiscal buffers to reduce the economic shock from the spread of the Covid-19 as stock markets crash and entire cities go into lock-down. Major central banks such as the US Federal Reserve and the Bank of England already cut interest rates and announced stimulus measures such as special funding arrangements for businesses, especially small and medium term enterprises.

The European Central Bank on Thursday left rates unchanged, but announced stimulus measures including ultra-cheap longer term loans for banks to boost lending to the real economy, and additional asset purchases.

Central banks are also pumping significant liquidity into financial markets through to stabilize markets as they keep crashing on coronavirus and oil price concerns.

For comments and feedback: contact editorial@rttnews.com

Copyright(c) 2020 RTTNews.com. All Rights Reserved

Market News provided by RTTNews

RECENT INTERNATIONAL FINANCIAL NEWS


Eurozone Producer Prices Fall Further (02 min(s), 03 sec(s) ago)
(RTTNews) - Eurozone producer prices declined at a faster pace in February, data from Eurostat sho ...Full Story»

Spain Unemployment Surges In March (33 min(s), 03 sec(s) ago)
(RTTNews) - Spain's unemployment increased sharply in March due to the lockdown announced afte ...Full Story»

UK House Price Growth Fastest Since Early 2018: Nationwide (01 hr(s), 52 min(s), 03 sec(s) ago)
(RTTNews) - UK house prices grew at the fastest pace in more than two years in March before the co ...Full Story»

Swiss Consumer Prices Fall For Second Month (02 hr(s), 18 min(s), 03 sec(s) ago)
(RTTNews) - Switzerland's consumer prices declined for the second month in a row in March, the ...Full Story»

Romania Producer Price Inflation At 4-month Low (02 hr(s), 29 min(s), 03 sec(s) ago)
(RTTNews) - Romania's producer price inflation lowest in four months in February, figures from ...Full Story»

UK House Price Growth Accelerates In March (03 hr(s), 06 min(s), 03 sec(s) ago)
(RTTNews) - UK house prices increased at the fastest pace since January 2018, data from the Nation ...Full Story»

India Manufacturing Growth Weakest In Four Months (03 hr(s), 12 min(s), 03 sec(s) ago)
(RTTNews) - India's manufacturing sector growth slowed in March due to a softer rise in output ...Full Story»

European Economics Preview: Eurozone Producer Price Data Due (04 hr(s), 44 min(s), 03 sec(s) ago)
(RTTNews) - Producer prices from euro area and unemployment from Spain are due on Thursday, headli ...Full Story»

Search

INTERNATIONAL FINANCIAL NEWS

Eurozone Producer Prices Fall Further

04/02/2020 - 05:21 AM (RTTNews)
(RTTNews) - Eurozone producer prices declined at a faster pace in February, data from Eurostat sho ...Full Story>>

Spain Unemployment Surges In March

04/02/2020 - 04:50 AM (RTTNews)
(RTTNews) - Spain's unemployment increased sharply in March due to the lockdown announced afte ...Full Story>>

UK House Price Growth Fastest Since Early 2018: Nationwide

04/02/2020 - 03:31 AM (RTTNews)
(RTTNews) - UK house prices grew at the fastest pace in more than two years in March before the co ...Full Story>>

Swiss Consumer Prices Fall For Second Month

04/02/2020 - 03:05 AM (RTTNews)
(RTTNews) - Switzerland's consumer prices declined for the second month in a row in March, the ...Full Story>>

Romania Producer Price Inflation At 4-month Low

04/02/2020 - 02:54 AM (RTTNews)
(RTTNews) - Romania's producer price inflation lowest in four months in February, figures from ...Full Story>>
Copyright © 2020. All market data is provided by Barchart Solutions. Information is provided "as is" and solely for informational purposes, not for trading purposes or advice. To see all exchange delays and terms of use, please see disclaimer.