Bloomberg News

Norges Bank to Cut Rate to 1.25% by June, Handelsbanken Says

December 15, 2011

Dec. 15 (Bloomberg) -- Norway’s central bank, which yesterday cut its benchmark interest rate by the most since May 2009, will lower the rate to 1.25 percent by June next year, Svenska Handelsbanken AB said.

“Given the weak outlook for the eurozone, we believe Norges Bank’s low interest rate scenario” from its monetary policy report published in October was “too optimistic,” Kari Due-Andresen, a senior economist at Handelsbanken said in an e- mailed note today. “We therefore believe the key policy rate will be cut by 25 basis points both in March and June next year, leaving the policy rate at 1.25 percent until well into 2013.”

Norges bank yesterday cut its key rate by 50 basis points to 1.75 percent. DNB ASA said in a separate report today that the central bank will lower its rate to 1.50 percent in March and keep it at that level for the rest of the year.

Oslo-based DNB, Norway’s largest lender, cut its 2012 growth forecast for Norway’s mainland economy, which excludes oil, gas and shipping, to 2.5 percent from an August forecast of 3.5 percent, citing weaker export demand. Growth this year is estimated at 2.6 percent, compared with a 2.8 percent forecast in August.

--Editor: Christian Wienberg.

To contact the reporter on this story: Meera Bhatia in Oslo at

To contact the editor responsible for this story: Christian Wienberg at

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