Against the dollar, the currency hit a 13-year low of 8.4593 crowns, down nearly 2 percent on the day, according to Reuters data.
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“Along our rate path the probability of a cut this autumn is modest, at most 25 per cent”, he added, toning down the chance of a third reduction in 2015. The cut breaks another record for low interest rates, with the bank board hoping it will stimulate the economy.
The oil and gas sector, worth a fifth of Norway’s economy, has been suffering cuts in investment and thousands of job losses.
The euro, meanwhile, built on recent gains after the head of the European Central Bank downplayed the need for further monetary stimulus any time soon and Germany’s IFO survey for September beat expectations.
Central bank governor Oystein Olsen said the rate “may be reduced further in the coming year”, noting that growth prospects for the Norwegian economy “have weakened, and inflation is projected to abate further out”.
“We expect the crown to weaken to 9.50 crowns against the euro”, said Richard Falkenhall, currency strategist at SEB, a leading Nordic bank.
“Growth in the Norwegian economy is likely to remain low for a longer period than projected earlier owing to the fall in oil prices through summer”, the bank said in a statement.
“The bank is increasingly anxious about the impact that low oil prices will have on the economy, having trimmed their growth forecasts for mainland GDP for 2016 and 2017”, said economist Colin Bermingham from BNP Paribas. “Interest rates should be held steady”, she advised.
Markets have taken the view that the other major central banks were under growing pressure to do more after the Federal Reserve delayed a hike in interest rates last week due in part to a soft global outlook.
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House price inflation has been a little higher than projected, albeit with wide regional dispersion. “Household debt has continued to grow at a faster pace than income”, it said.
