Global crisis may affect Norway rates

By John Acher and Terje Solsvik

OSLO (Reuters) - The global financial crisis is deeper than foreseen just a month or two ago and lower international growth will affect Norwegian interest rates, Norway's central bank Governor Svein Gjedrem said on Thursday.

Oil-rich Norway has enjoyed a five-year boom, culminating last year in breakneck 6.2 percent growth of the mainland economy -- excluding the offshore oil sector and ocean-going shipping. But signs of a slowdown have emerged since mid-2007 and growth is seen slowing considerably this year.

Gjedrem said the top priority for Norges Bank, the country's central bank, was to ensure a functioning credit market and that the bank could dampen but not prevent the effects of the crisis which was spreading from abroad.

His remarks on Norwegian television came at the end of another turbulent day in the money markets and a new liquidity injection by the bank of 71.1 billion Norwegian crowns (6.8 billion pounds) to keep the system functioning.

He vowed to continue providing adequate liquidity.

"We will ensure that banks have money in Norges Bank to maintain loan activity," Gjedrem said on a current affairs programme aired by national broadcaster NRK.

"The most important thing is to ensure that banks have access to money," he said.

"It is deeper and even stronger than we could have predicted one to two months ago," Gjedrem said of the international crisis on Norwegian TV 2 news.