Wednesday, Norway's central bank reduced its key policy rate by 50 basis points to 1.5%, with effect from May 7. In March, the bank had lowered its key interest rate to 2% from 2.5%.

Norges Bank Governor Svein Gjedrem said the central bank is setting the key policy rate at a low level in order to curb the decline in activity and prevent inflation from falling too far. He noted that the global recession is having an adverse impact on the Norwegian economy.

The country's inflation was stable at 2.5% in March. The central bank said there are prospects than inflation will slow and fall below 2.5%.

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