- The outlook for the global economy has deteriorated. In order to mitigate the impact in Norway, the interest rate is being reduced, says Deputy Governor Jan F. Qvigstad.

The interest rate forecast has been lowered. The Executive Board’s strategy is that the key policy rate should be in the interval 1-2 per cent in the period to the publication of the next Monetary Policy Report on 17 June 2009, unless the Norwegian economy is exposed to new major shocks. The analysis in Monetary Policy Report 1/09 suggests that the key policy rate may move down towards 1 per cent in the course of the autumn.

It appears that the decline in activity in the Norwegian economy will be more pronounced than previously assumed. The enterprises in Norges Bank’s regional network are expecting output and employment to fall further over the next six months. Unemployment is still low, but is rising rapidly.

- In order to cushion the decline in activity and prevent inflation from falling too far, it is appropriate to set the interest rate at a low level, says Deputy Governor Jan F. Qvigstad.

For further information, see “The Executive Board’s monetary policy decision – background and general assessment”, attached to the press release.

• Charts and background material