Norway unexpectedly lowered the Benchmark Interest Rate, and further rate cuts may occur this year.

Gate News bot reported that, according to Bloomberg, the Central Bank of Norway unexpectedly announced a cut in borrowing costs for the first time since the pandemic and indicated that further rate cuts could be possible this year. The Norwegian krone fell in response.

The Central Bank of Norway on Thursday cut its key deposit rate by a quarter of a percentage point to 4.25%, catching all economists surveyed by Bloomberg off guard, as none expected a change in rates. Officials stated that if the economy develops broadly in line with current forecasts, the policy rate will be further lowered in 2025.

"Since the monetary policy meeting in March, the inflation rate has decreased, and the inflation outlook for the next year indicates that the inflation rate is lower than previously expected," said Ida Wolden Bache, the Governor of the Central Bank of Norway. "Cautiously normalizing the policy rate will pave the way for the inflation rate to return to target levels without placing excessive restrictions on the economy."

The exchange rate of the Norwegian krone against the euro fell by 1.3% to 11.5994, reaching its lowest level since May 30.

Norges Bank has repeatedly postponed the start of interest rate cuts by monetary authorities in other developed countries, and this decision has made it more consistent with monetary authorities in other developed countries.

Norwegian officials' tough stance has previously been supported by the strong economy of the energy-exporting country Norway and the weakness of the Norwegian krone. The temporary surge in inflation has delayed the interest rate cut plans for March, while the improvement in domestic demand outlook seems to reduce the urgency for any easing policy before autumn.

Norwegian Central Bank policymakers stated that the interest rates predicted in Thursday's report will fall to just below 4% by the end of 2025, and to around 3% by the end of 2028.