Since the “interest rate account” follows from a specific model, the exact decomposition is model-dependent and should thus be interpreted as a model-based illustration rather than a precise description of the Executive Board’s reaction pattern. Notwithstanding this reservation, the “interest rate account” serves several purposes. First, it gives information about the reaction function. Second, it provides a compact summary of the Monetary Policy Report. Third, it is a tool of communicating commitment. Norges Bank aims at influencing expectations in order to stabilize inflation. In this respect, our policy has elements of commitment. The interest rate forecast should reflect economic news and not re-optimisation of monetary policy. With an “interest rate account”, the public is better able to check whether the central bank honours past commitments. Let me turn to the criteria underlying the interest rate forecast and reaction function. Among the few central banks that publish interest rate forecasts, it is common to communicate these in quite general terms. 3 When formulating the criteria, there is a trade-off between being too general, which does not provide very much information, and being too specific, which might overly restrict policymakers’ room for manoeuvre and be less robust to changes in the economic landscape. The Bank has developed a set of criteria for an appropriate interest rate path. The criteria serve both the purpose of communicating the reasoning behind the interest rate path to the public and of providing an agenda for the Board discussion, which makes it easier to decide on a particular path.

But the independence is not unlimited, as central banks are ultimately accountable to the political authorities. One could see transparency as an obligation that follows from gaining independence. Independence requires accountability, and accountability requires transparency. Transparency is also important for preserving the political acceptance for central bank independence. Finally, let me draw attention to another important issue, namely how to make good collective decisions. Monetary policy decisions are group decisions for two reasons. First, the interest rate decisions are usually taken by a monetary policy committee. Second, the inputs for the decisions are produced by the central bank staff. There has been a significant increase in the research on monetary policy committees during the last years, but the role of the staff in the decision-making process has received remarkably little attention in the literature. At Norges Bank, the staff members have two roles; producer (of analyses, forecasts, research, etc) and adviser. Each economist at Norges Bank has to give his or her interest rate advice before the interest rate meetings, and we have a system of aggregating the advice up to the governor and myself. Since most central banks have a large pool of highly skilled staff members, it is important to utilise this potential. What is the best way to aggregate the judgements of the  10  Duisenberg, Wim (2001): “Letter of Dr. W. F. Duisenberg, President of the ECB to the Chairperson of the Committee on Economic and Monetary Affairs”, www.ecb.int. BIS Review 132/2008  7  staff members?