NEWS

Norway’s central bank cut its benchmark interest rate to a record low and signaled it’s prepared to ease policy further to ward off a recession in western Europe’s biggest crude oil producer.

The overnight deposit rate was lowered by 25 basis points to 0.50 percent, the Oslo-based central bank said on Thursday. The decision was predicted by 18 of 20 economists surveyed by Bloomberg. The bank predicted that its rate will bottom at 0.2 percent in the first quarter next year.

“The current outlook for the Norwegian economy suggests that the key policy rate may be reduced further in the course of the year,” Governor Oeystein Olsen said in a statement. The bank also warned that it can’t rule out a negative rate should the economy be exposed to “new major shocks.”

Even so, the bank said lower rates “could increase financial system vulnerabilities” and that it’s now “proceeding with greater caution in interest rate setting.”