When it is widely expected that prices will continue rising rapidly, that may also have a self-reinforcing effect on inflation. The chart shows inflation expectations one, two and five years ahead in Norway among households, firms, specialists in economics and the social partners (Chart 6).9 Over the past year, inflation expectations over the next few years have shown a clear increase. Longer-term expectations have increased less. 8. Studies that compare price dynamics in periods of low inflation with periods of high inflation are consistent with such an interpretation. See Fredrik Wulfsberg (2016). "Inflation and Price Adjustments: Micro Evidence from Norwegian Consumer Prices 1975–2004." American Economic Journal: Macroeconomics, 8 (3). See also the box “Uncertainty about price dynamics when inflation is high” in Monetary Policy Report 4/2022. 9. Inflation expectations one and two years ahead are an average of expectations among households, firms, specialists in economics and the social partners. Only specialists in economics and the social partners are asked about inflation expectations five years ahead. Norges Bank  Economic perspectives 2023  8  Chart 6 Inflation expectations have increased Inflation expectations ahead. Percent 5.5 One year ahead Two years ahead Five years ahead  5 4.5 4 3.5 3 2.5 2 1.5 2002  2004  2006  2008  2010  2012  2014  2016  2018  2020  2022  Sources: Epinion, Ipsos, Opinion and Statistics Norway  The expectation that inflation will be high one year ahead is not necessarily a warning signal.

This entails focusing our sights on the path ahead, towards re-building a global financial architecture that will facilitate and secure our economic prospects. With the considerable benefit of hindsight, we now know that finance, if not anchored to the aim of creating sustainable value in the real economy, will become inherently unstable and destabilising to the ultimate goals of greater shared prosperity. There is thus a compelling need for finance to have a greater role in shaping responsible behaviour that underpins a stable and well-functioning economy, and advances the goals of a progressive society and sustainable environment. This is the underlying objective of responsible finance. Of significance, aligning business practices towards responsible finance entails a paradigm shift away from the conventional thinking of finance - the most important distinction being the need to recognise and appreciate that responsible finance delivers value by focusing on its ultimate outcomes, rather than its immediate returns. Responsible finance at its core strives to serve wider objectives that is consistent with, but goes beyond, the predominant objective of enhancing shareholder value. In delivering long term sustainable value, allocative efficiency is achieved in a manner that promotes stability and prosperity in the broader economy and sustainability of the environment. Above all, responsible finance aims to optimise its positive impact on society, economic wellbeing and development. Over the recent decade, the heightened advocacy for ethical and socially responsible investments has also seen the proliferation of financial instruments that cater for both financial and societal objectives.