The second member believes that inflation is broadly as expected, but the pressures in the economy are surprisingly high on the upside. This member, too, will conclude, that the interest rate should  27  See overview and further references in Carl Andreas Claussen, Egil Matsen, Øistein Røisland and Ragnar Torvik (2009): “Overconfidence, monetary policy committees and chairman dominance”, Norges Bank Working Paper 2009/17. 28  The members of the Executive Board are appointed by the government. According to Proposition No. 81 (2002–2003) to the Odelsting, the appointment process shall ensure that the Executive Board reflects a broad range of backgrounds and expertise, with particular emphasis on economics and finance, as well as a thorough understanding of economic issues. The proposition states that the Executive Board shall be composed of persons of different backgrounds to ensure that it is capable of being critical of its own assessments. See Proposition No. 81 (2002–2003) to the Odelsting: Om lov om endringer i sentralbankloven og finansieringsvirksomhetsloven og om opphevelse av valutareguleringsloven og penge- og kredittreguleringsloven (Concerning an Act to amend the Norges Bank Act and the Financial Institutions Act and concerning the repeal of the Exchange Control Act and the Monetary and Credit Policy Act). Ministry of Finance. Board appointment guidelines and rules relating to limitations on members’ ownership interests and functions are set out in the Norges Bank Act and the Regulation of 7 August 2000 relating to Norges Bank’s Executive Board members’ relationship to other credit institutions and undertakings.

History has shown that the countries that devalued in 1931 weathered the depression better than those which did not. 12 Following the British lead was a decision that produced a good outcome. In 1949 there was a new sterling devaluation, this time 30 per cent against the US dollar. As in 1931, the Norwegian government announced that the value of the krone would be lowered correspondingly 13 . But unlike at that time, the level of activity in Norway was now high, and  9  The letter from the British Academy to the Queen is available at: http://media.ft.com/cms/3e3b6ca8-7a08-11de-b86f-00144feabdc0.pdf. 10  See Frank H. Knight (1921): Risk, uncertainty, and profit, Hart, Schaffner & Marx; Houghton Mifflin Co, Boston. 11  See the article “Fotspor med historie” [Footsteps with history], Aftenposten, 8 July 1989 and Rod Pyle (2007): Destination Moon: The Apollo Missions in the Astronauts’ Own Words, Harper Paperbacks. For further discussion and additional examples, see Thomas Gilovich, Dale Griffin and Daniel Kahneman (2002): Heuristics and biases. The psychology of intuitive judgment, Cambridge University Press. 12  See the discussion in Tore Jørgen Hanisch, Espen Søilen and Gunhild Ecklund (1999): Norsk økonomisk politikk i det 20. århundre. Verdivalg i en åpen økonomi, [Norwegian economic history in the 20th century. Ethical choices in an open economy] Høyskoleforlaget, Kristiansand. 13  The government had discussed how Norway should respond to a British devaluation. However, they had not reached a final conclusion and the government was split.