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[OSLO] Two centuries after its creation, Norway's central bank finds itself without any guide in history to help it tackle the challenges ahead.
It has largely been forced to follow its bigger peers down a rabbit hole of ever lower interest rates to counter a "long- term" global trend of slower growth, a global savings glut and weakening productivity, according to central bank Governor Oeystein Olsen. But the alternative would have been even less palatable.
"Central banks have more or less done their jobs," he said in an interview before a speech in Trondheim, Norway, to celebrate the bank's 200th anniversary.
"I'm talking about international, major central banks now. Because if they hadn't responded we would have been worse off. But having said that, we all realise having inflation and interest rates around zero level, central banks are in unknown territory."
Norway, which sits on an US$860 billion sovereign wealth fund, has been able to avoid the negative rates and unconventional policies that have been unleashed in much of Europe and Japan.
Mr Olsen is preparing for a rate meeting next week where he's likely to keep the benchmark at a record low of 0.5 per cent. He has cut rates three times since 2014 to support growth and weaken the krone.
To Mr Olsen, it has "been striking" how well the flexible inflation targeting system has worked for "a small, open, also very resource-rich economy, which is then exposed to external shocks in terms of trade."
Norway, western Europe's biggest oil exporter, is in a better situation now than when oil prices dropped below US$28 a barrel in January. Brent crude traded at above US$50 this week.
"These days we're relatively optimistic," Mr Olsen said, referring back to his latest monetary policy report in March. Back then, Mr Olsen said the bank was prepared to ease further, but that it was important to exercise "caution" the closer policy gets to zero.
Central banks face yet another unknown, with the UK set to vote on its future in the European Union next week. Markets are becoming increasingly turbulent as polls suggest Britons may opt to leave the EU.
"Generally, as a central bank we are always aware and prepared to tackle new situations and volatility in markets," Mr Olsen said.