Forum for Science, Industry and Business

Sponsored by:     3M 
Search our Site:

 

Monetary policymaking in Norway

10.03.2006


The interest rate setting in the past 2-3 years has contributed to a strong development of the Norwegian economy. Now, the issue is when and by how much monetary policy should be tightened, concludes “Norges Bank Watch 2006”, published by BI The Norwegian School of Management.



The Centre for Monetary Economics (CME) at the BI Norwegian School of Management has for the seventh time invited a committee of leading economists for Norges Bank Watch with the objective of evaluating monetary policy in Norway. The Norges Bank Watch 2006 Report was released on 9 March 2006. The report was commented by Norges Bank Governor Svein Gjedrem.

The main task of the committee has been to evaluate how well Norges Bank has fulfilled its monetary policy mandate given by the Norwegian Government. Norway adopted an inflation target for the monetary policy five years ago, in March 2001. Although some countries had pursued inflation targeting for many years, this type of monetary regime was still in its infancy.


Norges Bank operates a flexible inflation target, where weight is given both to low and stable inflation, and to stable output and employment.

After five years with a new regime, a brief summing up might be in order. How does inflation targeting work, compared to what we expected?

Overall, monetary policy in Norway is quite successful. The interest rate setting in the past 2-3 years has contributed to a strong development of the Norwegian economy, without sacrificing price stability. Now, the issue is when and by how much monetary policy should be tightened, to avoid an excessive stimulation of the economy.

Since the adoption of an inflation target five years ago, Norges Bank has been determined to learn and improve, as well as to being open and transparent. The Bank’s policy, analysis and communications have developed and improved over time.

The Regulation on Monetary Policy should be interpreted in a forward-looking way, and past inflation discrepancies should not be compensated for in the future. Thus, the current policy strategy, which aims to take inflation gradually up towards the 2.5 percent target, does not violate the Regulation, even if it involves inflation considerably below the operational target for six consecutive years.

The Norwegian economy is currently into its third year of above-trend growth. Most sectors of the economy are expanding, some quite rapidly. Labour demand is picking up, and unemployment is very close to historic lows. While wage and price inflation thus far remain low, the present situation calls for somewhat tighter monetary policy than what Norges Bank currently indicates. High credit and asset price growth strengthen this view.

We believe that there is greater risk involved by hiking too little, too late, than by hiking too much, too early. In the latter case, it is relatively easy to reverse policy. In the former case, the longer one waits, the greater the likelihood that one has to tighten in greater steps, contrary to what the bank itself sees as a good way of setting interest rates, concludes the Norges Bank Watch’ economists.

Audun Farbrot | alfa
Further information:
http://www.bi.no/templates/NyhetsArtikkel____37844.aspx

More articles from Transportation and Logistics:

nachricht Tool helps cities to plan electric bus routes, and calculate the benefits
09.01.2017 | International Institute for Applied Systems Analysis (IIASA)

nachricht Realistic training for extreme flight conditions
28.12.2016 | Technical University of Munich (TUM)

All articles from Transportation and Logistics >>>

The most recent press releases about innovation >>>

Die letzten 5 Focus-News des innovations-reports im Überblick:

Im Focus: Designing Architecture with Solar Building Envelopes

Among the general public, solar thermal energy is currently associated with dark blue, rectangular collectors on building roofs. Technologies are needed for aesthetically high quality architecture which offer the architect more room for manoeuvre when it comes to low- and plus-energy buildings. With the “ArKol” project, researchers at Fraunhofer ISE together with partners are currently developing two façade collectors for solar thermal energy generation, which permit a high degree of design flexibility: a strip collector for opaque façade sections and a solar thermal blind for transparent sections. The current state of the two developments will be presented at the BAU 2017 trade fair.

As part of the “ArKol – development of architecturally highly integrated façade collectors with heat pipes” project, Fraunhofer ISE together with its partners...

Im Focus: How to inflate a hardened concrete shell with a weight of 80 t

At TU Wien, an alternative for resource intensive formwork for the construction of concrete domes was developed. It is now used in a test dome for the Austrian Federal Railways Infrastructure (ÖBB Infrastruktur).

Concrete shells are efficient structures, but not very resource efficient. The formwork for the construction of concrete domes alone requires a high amount of...

Im Focus: Bacterial Pac Man molecule snaps at sugar

Many pathogens use certain sugar compounds from their host to help conceal themselves against the immune system. Scientists at the University of Bonn have now, in cooperation with researchers at the University of York in the United Kingdom, analyzed the dynamics of a bacterial molecule that is involved in this process. They demonstrate that the protein grabs onto the sugar molecule with a Pac Man-like chewing motion and holds it until it can be used. Their results could help design therapeutics that could make the protein poorer at grabbing and holding and hence compromise the pathogen in the host. The study has now been published in “Biophysical Journal”.

The cells of the mouth, nose and intestinal mucosa produce large quantities of a chemical called sialic acid. Many bacteria possess a special transport system...

Im Focus: Newly proposed reference datasets improve weather satellite data quality

UMD, NOAA collaboration demonstrates suitability of in-orbit datasets for weather satellite calibration

"Traffic and weather, together on the hour!" blasts your local radio station, while your smartphone knows the weather halfway across the world. A network of...

Im Focus: Repairing defects in fiber-reinforced plastics more efficiently

Fiber-reinforced plastics (FRP) are frequently used in the aeronautic and automobile industry. However, the repair of workpieces made of these composite materials is often less profitable than exchanging the part. In order to increase the lifetime of FRP parts and to make them more eco-efficient, the Laser Zentrum Hannover e.V. (LZH) and the Apodius GmbH want to combine a new measuring device for fiber layer orientation with an innovative laser-based repair process.

Defects in FRP pieces may be production or operation-related. Whether or not repair is cost-effective depends on the geometry of the defective area, the tools...

All Focus news of the innovation-report >>>

Anzeige

Anzeige

Event News

12V, 48V, high-voltage – trends in E/E automotive architecture

10.01.2017 | Event News

2nd Conference on Non-Textual Information on 10 and 11 May 2017 in Hannover

09.01.2017 | Event News

Nothing will happen without batteries making it happen!

05.01.2017 | Event News

 
Latest News

Multiregional brain on a chip

16.01.2017 | Power and Electrical Engineering

New technology enables 5-D imaging in live animals, humans

16.01.2017 | Information Technology

Researchers develop environmentally friendly soy air filter

16.01.2017 | Power and Electrical Engineering

VideoLinks
B2B-VideoLinks
More VideoLinks >>>