The inflation target is symmetrical – it is just as important to avoid an inflation rate that is too low as an inflation rate that is too high. The inflation target provides economic agents with an anchor for inflation expectations. Decisions concerning saving and investment can be based on the assumption that inflation in Norway will be around 2½ per cent over time. Norges Bank’s instrument to meet the inflation target is the key policy rate, which is the interest rate on banks’ deposits in Norges Bank. This interest rate forms the basis for banks’ lending and deposit rates. 2  BIS central bankers’ speeches  The Bank’ monetary policy assessments and decisions must be based on knowledge it can obtain on interactions within the Norwegian economy and how the interest rate interacts. But we need a methodical apparatus to structure this knowledge. Like other central banks, Norges Bank uses economic models as an aid in monetary policy analysis. Economic models can help us to interpret historical developments, make forecasts for the future and analyse the effect of the interest rate. For an economic model to be relevant, it must be fit for its intended purpose. A model that is to be used as an aid in making interest rate decisions requires different attributes and is based on different principles than models that for example seek to provide optimal near-term inflation and output forecasts. In this chart, the time axis has been divided into three: short term, medium term and long term.

This is important to ensure a sustained supply of human talent to support the long-term growth of Islamic finance. To meet this requirement, a complete training infrastructure has been established. Islamic Banking and Finance Institute Malaysia (IBFIM), which is an industry-owned training institute, will now focus on providing technical programmes in Islamic finance. The recently launched International Centre for Education in Islamic Finance (INCEIF) will provide professional certification as well as postgraduate programmes. The INCEIF flagship programme, the Certified Islamic Finance Professional certification programme, is scheduled to begin on 1 June 2006. For leadership development programmes, ICLIF will play its role in developing leaders to serve the industry, providing facilities for education in Islamic finance to not only support the development of the domestic Islamic financial system, but to also position Malaysia as an international centre for education in Islamic finance. And in so doing, this will contribute towards the global development of Islamic finance. Industry players therefore have the opportunity to assist their staff to acquire the necessary skills at these institutions. The Islamic financial institutions also require forward-looking leaders to steer the industry in the more demanding and challenging environment. Ladies and Gentlemen, The huge potential in Islamic finance can only be realised if sufficient resources and drive are accorded to it. In conclusion, let me take this opportunity to congratulate the AmBank Group on the initiative to establish its own Islamic banking subsidiary and provide the necessary resources and support to ensure its success.