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 Experiments show that a few self-driving cars can dramatically improve traffic flow
10.05.2017 | University of Illinois College of Engineering

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

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: A quantum walk of photons

Physicists from the University of Würzburg are capable of generating identical looking single light particles at the push of a button. Two new studies now demonstrate the potential this method holds.

The quantum computer has fuelled the imagination of scientists for decades: It is based on fundamentally different phenomena than a conventional computer....

Im Focus: Turmoil in sluggish electrons’ existence

An international team of physicists has monitored the scattering behaviour of electrons in a non-conducting material in real-time. Their insights could be beneficial for radiotherapy.

We can refer to electrons in non-conducting materials as ‘sluggish’. Typically, they remain fixed in a location, deep inside an atomic composite. It is hence...

Im Focus: Wafer-thin Magnetic Materials Developed for Future Quantum Technologies

Two-dimensional magnetic structures are regarded as a promising material for new types of data storage, since the magnetic properties of individual molecular building blocks can be investigated and modified. For the first time, researchers have now produced a wafer-thin ferrimagnet, in which molecules with different magnetic centers arrange themselves on a gold surface to form a checkerboard pattern. Scientists at the Swiss Nanoscience Institute at the University of Basel and the Paul Scherrer Institute published their findings in the journal Nature Communications.

Ferrimagnets are composed of two centers which are magnetized at different strengths and point in opposing directions. Two-dimensional, quasi-flat ferrimagnets...

Im Focus: World's thinnest hologram paves path to new 3-D world

Nano-hologram paves way for integration of 3-D holography into everyday electronics

An Australian-Chinese research team has created the world's thinnest hologram, paving the way towards the integration of 3D holography into everyday...

Im Focus: Using graphene to create quantum bits

In the race to produce a quantum computer, a number of projects are seeking a way to create quantum bits -- or qubits -- that are stable, meaning they are not much affected by changes in their environment. This normally needs highly nonlinear non-dissipative elements capable of functioning at very low temperatures.

In pursuit of this goal, researchers at EPFL's Laboratory of Photonics and Quantum Measurements LPQM (STI/SB), have investigated a nonlinear graphene-based...

All Focus news of the innovation-report >>>

Anzeige

Anzeige

Event News

Marine Conservation: IASS Contributes to UN Ocean Conference in New York on 5-9 June

24.05.2017 | Event News

AWK Aachen Machine Tool Colloquium 2017: Internet of Production for Agile Enterprises

23.05.2017 | Event News

Dortmund MST Conference presents Individualized Healthcare Solutions with micro and nanotechnology

22.05.2017 | Event News

 
Latest News

Physicists discover mechanism behind granular capillary effect

24.05.2017 | Physics and Astronomy

Measured for the first time: Direction of light waves changed by quantum effect

24.05.2017 | Physics and Astronomy

Marine Conservation: IASS Contributes to UN Ocean Conference in New York on 5-9 June

24.05.2017 | Event News

VideoLinks
B2B-VideoLinks
More VideoLinks >>>