Norway cut its interest rate to 0.5% and said it might go negative

Norway became the latest central bank to cut rates, slicing 25 basis points off its benchmark rate to hit 0.5%.

Norway is fighting low inflation and Oystein Olsen, the central bank chief, said the market could expect further cuts.

"The current outlook for the Norwegian economy suggests that the key policy rate may be reduced further in the course of the year," said Olsen.

"Should the Norwegian economy be exposed to new major shocks, the Executive Board will, however, not exclude the possibility that the key policy rate may turn negative," Olsen said.

The cut follows European Central Bank Chief Mario Draghi's move to push the deposit rate to minus 0.4% last week, and shows how central banks are struggling to stoke stagnant economies.

Many economists, such as former PIMCO CEO Mohamed El-Erian, see low and and negative rates as a sign that central banks are running out of effective tools.