Norges Bank earlier on Thursday lowered interest rates as expected to 0.50 percent and lowered rate path. The new interest rate path was adjusted down 40 basis points in 2017 and down 65 basis points in the fourth quarter of 2018. The new rate path now implies one further interest rate cut and a 20 percent probability that the interest rate will be lowered to 0 percent.
In a statement released, the central bank noted that lower interest rates could increase financial system vulnerabilities and that it will proceed with greater caution in interest rate setting. It added that should the Norwegian economy be exposed to new major shocks, the Executive Board will, however, not exclude the possibility that the key policy rate may turn negative.
The krone appreciated immediately after the decision, but later edged lower. EUR/NOK was trading at 9.5106 at 1200 GMT after slipping to 9.3708 levels.