RTTNews - The Norwegian central bank reduced its key policy rate unexpectedly by 25 basis points to a record low on Wednesday.

The Norges Bank's Executive Board lowered the key policy rate to 1.25%, effective from June 18. Economists were expecting the central bank to retain the interest rate at 1.5%. In May, they had slashed the interest rate by 50 basis points to 1.5%. The key policy rate has been reduced by 4.5 percentage points since September.

Norges Bank Deputy Governor Jan Qvigstad said, the domestic output will gradually pick up again, but inflation is expected to slow to around 1.5% in the coming year.

The Monetary Policy Report indicates that the key policy rate can remain close to 1% for a period ahead.

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