Scandinavian central banks leap into action in virus response

OSLO (AFP) – Norway’s central bank said yesterday it was cutting its guiding rate as an emergency measure to mitigate the economic consequences of the COVID-19 outbreak.

The move, coming in the wake of central bank action across the world, takes the key rate 0.5 points lower to one per cent.

“There is considerable uncertainty about the duration and impact of the coronavirus outbreak, with a risk of a pronounced economic downturn,” the bank said in a statement.

Meanwhile in neighbouring Sweden the central bank said it stood ready to lend up to SEK500 billion (USD51 billion) to companies via the banking system.

“The aim is to maintain the supply of credit to Swedish companies,” the Riksbank said, adding it would supply more liquidity if necessary.

Both central banks took their decision at emergency meetings on Thursday.

In addition to the rate cut, Norway’s central bank said it would offer extraordinary loans to banks, while the finance ministry said it was allowing banks to run down capital buffers to free up liquidity.

The Norwegian government was also due to present measures to support the economy, in particular airlines such as Norwegian Air Shuttle, which has been hit hard by the fall in demand.

On Thursday evening, the Nordic country recorded its first death from the coronavirus, with 621 confirmed cases. Sweden has also had one coronavirus death, and 620 confirmed cases.

Also on Thursday, Norway’s government unveiled what it called the “most intrusive measures” the country has seen in peacetime in order to curb the spread of the novel coronavirus.