Norway's central bank on Thursday announced it had cut its key interest rate by a quarter point to a record low 0.75 percent to counteract the impact of plunging oil prices on the economy.

Central bank governor Oystein Olsen said the rate "may be reduced further in the coming year," noting that growth prospects for the Norwegian economy "have weakened, and inflation is projected to abate further out."

The rate cut surprised economists, most of whom had expected it to remain unchanged until later this year.

The Norwegian krone, which has already lost much of its value against the euro and especially the dollar in recent months, weakened immediately after the announcement.

At 10:20 am (08H20 GMT), it was trading at 0.1056 euros, compared to 0.1079 just before the announcement, and at $0.1182 compared to $0.1210.

The central bank maintained its growth forecast for this year of 1.25 percent, but revised downwards its 2016 forecast from 1.5 to 1.25 percent, which is considered a low level in the prosperous Scandinavian country.

"Growth in the Norwegian economy is likely to remain low for a longer period than projected earlier owing to the fall in oil prices through summer," Olsen said.

"Oil investment is expected to fall to a further extent than projected in June, and lower demand for goods and services from the petroleum sector will reduce activity in other parts of the economy," he added.