neutral interest rate is the rate that does not in itself result in an increase or a reduction in price and cost inflation in the economy in the course of a business cycle. an assessment of whether interest rate setting is expansionary or contractionary, involves comparing short - term market rates with the neutral rate. a real interest rate in the interval 3 – 4 per cent is often regarded as neutral in economies such as the norwegian economy. i will revert to a quantification of this level later. in the longer term, the interest rate level influences capital accumulation in the economy and the potential for economic growth. the equilibrium interest rate is the rate that ensures that capital accumulation corresponds to saving in the economy. this results in an output potential that over time satisfies demand without generating pressures in the economy. the equilibrium interest rate is determined by long - term phenomena associated with the structure of the economy, while the neutral rate is defined on the basis of its influence on pressures in the economy and thereby on inflation. in the long term, the neutral interest rate will correspond to the longterm equilibrium interest rate in the economy. the long - term equilibrium interest rate is determined by fundamental structural relationships in the economy, such as consumer impatience and the economic growth rate. rising population growth means that a larger labour force must be equipped with real capital. fixed investment and saving must increase. higher population growth will therefore require a higher equilibrium interest rate. the higher productivity growth is, the higher future gains from today ’ s investments will be. this also provides the basis for a higher equilibrium interest rate. the long - term equilibrium interest rate cannot deviate too much between countries over time. with liberalised capital markets, capital will move towards those countries that can provide the highest return. substantial interest rate differentials between countries cause fluctuations in the exchange rate and will not be compatible with a long - term equilibrium. thus, we may refer to a global equilibrium interest rate for open economies, although perhaps with an added national risk premium. the interest rate has thus several roles to play in the economy and these roles should be fairly closely linked. the interest rate shall in the short and medium term contribute to stable inflation and stable developments in production. at the same time, it shall in the long term also contribute to equilibrium in the market for real capital. capital accumulation shall over time correspond to saving. to achieve this, the real interest rate must not over time deviate substantially from the return on real capital. substantial deviations can give

##ence. capital outflows have been less 1 in q1 / 2022, global house prices, in nominal terms, are rising at a rate of 10. 2 %, in real terms ( once adjusted for inflation ) is closer to 3. 3 %. the rate of real house price growth has now declined for two consecutive quarters ( figure 2 ). in q1 / 2022, global debt has increased by $ 3. 3 trillion to a new record of over $ 305 trillion, largely driven by the world ’ s two largest economies, china and the us, while china ’ s debt rose by $ 2. 5 trillion in q1, the us added $ 1. 5 trillion ( figure 3 ). page 1 of 3 intense than during the taper tantrum and the initial covid shock in 2020. currency movements have largely mirrored usd appreciation. part of this reflects stronger fundamentals and large buffers : including deeper local markets, sound fiscal positions ; high foreign exchange reserves ; well - capitalized banks ; low foreign currency debt ; and lower foreign holdings of local assets. • how small open economies should respond varies by country, depending on their context. countries with stronger policy frameworks, sound external and internal finances, and a broader range of tools - - including fx intervention and macroprudential measures - - are in a better position to manage the risks and trade - offs resulting from tighter global financial conditions. in thailand, for example, our circumstances have allowed us to take a more gradual and measured approach towards policy normalization. part 2 : the second challenge is the shifting international trade and geopolitical landscape • the need to build more resilient supply chains, coupled with the more polarized international environment, has given greater impetus to de - globalization or at the very least to reglobalization. a survey of fortune 1000 companies found that 94 % experienced problems from supply chain disruptions from covid - 19. the likely trend towards reshoring, near - shoring, and friend - shoring is leading to potential reconfigurations of global supply chains. the economies of southeast asia are particularly exposed to such reconfigurations as they have high participation in global value chains, but are located mostly downstream in those value chains, and thereby face higher risks of being left out. • at the same time, greater importance attached to esg considerations have led to new standards and expectations - - new global rules of the game - - about how countries can