See Andersson, M., Szörfi, B., Tóth M. and Zorell, N. (2018), “Potential output in the post-crisis period”, ECB Economic Bulletin, Issue 7. 2. Slack is a proxy of the economy’s capacity to grow without straining resources and leading to excessive cost and price rises. 3. The likelihood of hitting the lower bound in a crisis had increased with the fall in nominal and real rates, which mainly reflected the success of monetary policy in anchoring inflation expectations and a fall in the natural (real) rate of interest. The latter was driven by ageing, waning productivity growth, a rise in markups and a surge in risk aversion in the wake of the global financial crisis. See Brand, C., Bielecki, M. and Penalver, A. (eds.) (2018), “The natural rate of interest: estimates, drivers, and challenges to monetary policy”, Occasional Paper Series, No 217, ECB, December. 4. Demand shortfalls may perpetuate themselves, resulting in persistent or even permanent impacts on output (hysteresis), by adversely affecting the supply potential of the economy and thereby lowering the level of potential output or even its longer-term growth rate. For instance, firms may refrain from undertaking investment decisions or cut their innovation budgets. See Andersson, M. et al. (2018), op. cit. and Yellen, J.L., “Macroeconomic Research After the Crisis”, speech at the 60th annual economic conference sponsored by the Federal Reserve Bank of Boston, Boston, October 2016. 5. As supply shocks create a temporary trade-off between inflation and real activity, a gradual policy response avoids creating unnecessary volatility in growth and employment.

I would like to single out three key aspects of this strategy. We will emphasise exploiting the Bank's characteristics as a large and long-term investor in order to achieve the objective of the highest possible return. Norges Bank is able to make investments whose underlying value may take a long time to realise. A long-term investment horizon also means that we can invest differently to many other investors, even in difficult and illiquid markets. The fund's size enables us to explore new ways of investing at little additional cost. As a large, active and long-term participant in capital markets, the Bank is an attractive investor and partner. In unlisted markets, this may open up opportunities unavailable to others. We will set great store by being a responsible investor. Responsible investment and active ownership support the objective of the highest possible return. Transparency about this work is important, and we expanded our reporting in this area in 2022. Managing climate-related risks and opportunities is an important priority. An orderly climate transition in line with the goals of the Paris Agreement is in the fund's economic interest. 1/2  BIS - Central bankers' speeches  The Ministry of Finance updated its mandate for Norges Bank in 2022. The Bank's work on responsible investment is now to be based on the long-term goal that the companies we invest in align their activities with global net zero emissions in accordance with the Paris Agreement. We published an ambitious Climate Action Plan in the autumn for the period 2022-2025.