things stand now, the rise in prices will be notably higher than wage growth this year. indebted households will face both higher interest expenses and higher electricity and food prices. many households will be facing a tighter financial situation, and i am fully aware that some of them will also be facing a financial struggle. most households will be able to cope with higher interest rates on their loans. unemployment is very low. many will be able to cut down on other expenses or draw on their savings. chart : monetary policy meeting on 17 august we could have decided to raise the policy rate more gradually. but then we would have run the risk of inflation becoming entrenched at a high level. that would have made it more difficult to bring inflation down and could have required a sharper tightening of monetary policy somewhat further out, increasing the risk of an economic downturn. inflation has surprised to the upside in recent months. this is why the policy rate has been raised somewhat more rapidly than signalled earlier. and the economy might evolve differently from what we have envisaged. the level of uncertainty is high. limited spare capacity in the norwegian economy and persistent external inflationary pressures may lead to inflation accelerating further. on the other hand, the rise in interest rates and high inflation may cool down the housing market and curb household consumption faster than currently envisaged. there is also a risk of a sharper slowdown in global growth. the future path of the policy rate will depend on how the economy evolves. we cannot make any promises about the policy rate. the promise we can make is that we will continue our efforts to fulfil the mandate of keeping inflation low and stable and to promote economic stability. 1 a new set of forecasts was not prepared for the monetary policy meeting on 17 august. updated forecasts will be presented when monetary policy report 3 / 22 is published on 22 september. 3 / 3 bis central bankers'speeches

borders. as you can see from the chart, high inflation is not unique to norway. in many countries, inflation is even higher than in norway. there are several reasons why inflation has reached such a high level internationally. 1 / 3 bis central bankers'speeches the impact of the covid - 19 pandemic continues to linger. demand for goods was high during the pandemic, underpinned by expansionary monetary and fiscal policies. at the same time, the pandemic led to supply chain disruptions. in sum, these factors have led to rapidly rising prices for globally traded goods. freight rates have also risen sharply. supply problems have been amplified by russia ’ s invasion of ukraine. the invasion has also led to soaring energy prices. gas and electricity prices have continued to increase through summer and could push up inflation abroad in the short term. other prices, some of which rose sharply following the invasion, have recently edged down. these include oil prices and prices for metals and agricultural products. global supply chain disruptions also appear to have eased somewhat. because of the high level of inflation, central banks in many countries have raised policy rates and signalled further rate increases ahead. several central banks have raised rates by larger increments than usual. high inflation and rising interest rates could dampen growth among many of norway ’ s trading partners ahead. in norway, prices for many imported goods have risen sharply. but external developments are only part of the story. the rise in prices for domestically produced goods and services has also accelerated in recent months. one of the main reasons for this is the pressures in the norwegian economy. chart : the labour market is tight we feared for some time that unemployment would become entrenched at a high level in the wake of the pandemic. but after a rapid recovery, the level of activity in the norwegian economy is now high and spare capacity is limited. the labour market is tight. since june unemployment has fallen slightly more than we expected and is now at a very low level. the employment rate is at its highest for more than ten years. the number of people outside the labour market has decreased, which is a welcome development. at the same time, the number of job vacancies is high, and labour shortages are a challenge in many industries. with intensified competition for labour, employers are willing to go to greater lengths to recruit people with the right skills. we expect wage growth to continue to rise ahead. new data also indicate that wage growth