the growth in labour costs in the latter half of the 1990s left its mark on profitability. both in manufacturing and other industries, labour costs as a percentage of factor income have increased since the mid - 1990s. the analysis in the june 2000 inflation report indicates that consumer price inflation in 2001 and 2002 may exceed levels which are consistent with exchange rate stability over time. the risk of rising wage and price inflation has increased, while there now appears to be little risk of a pronounced recession over the next two years. on the basis of developments in the norwegian economy and the future outlook, norges bank raised its key rates by 0. 25 percentage point as of 13 april, by 0. 5 percentage point as of 15 june and by 0. 5 percentage point as of 10 august. as already mentioned, this represents a substantial step in the adjustment of the interest rate that is appropriate on the basis of the analyses in the june inflation report. however, in the light of recent trends in the economy and the balance of risks, the probability that the next change in interest rates will be an increase is greater than the probability of a reduction. coordination of economic policy the experience of the 1970s and 1980s shows that, in the long term, monetary policy is not suitable for influencing competitiveness or the size of the internationally exposed sector. any attempt to do this through the use of monetary policy instruments will inevitably lead to instability. however, fundamental real economic forces of this kind can be shaped through the use of fiscal policy. although monetary policy is not suitable for influencing competitiveness, exchange rate fluctuations may provide an early warning that the internationally exposed sector is on the verge of losing or gaining strength in the contest for economic resources. a sound basis for exchange rate stability is a fiscal policy which manages to smooth fluctuations in domestic demand and production, coupled with well functioning income determination. the primary difference between norway and countries which have chosen to base their monetary policy regime on an inflation target is to be found in the interaction between monetary policy and fiscal policy. the role of the petroleum fund the norwegian economy is small and open. fluctuations in oil prices and oil revenues pose a considerable challenge to norwegian economic policy. the government petroleum fund plays an important role in stabilising developments in the mainland economy. a large portion of the central government ’ s oil and gas revenues is invested abroad through the petroleum fund. balance in the norwegian krone market is maintained by investing foreign exchange earnings abroad, thereby curbing the effect of fluctuations in oil prices on the k

24th assiom forex congress speech by the governor of the bank of italy ignazio visco verona, 10 february 2018 global growth strengthened considerably last year although uncertainties remain linked to future us trade policies and possible upward shifts in risk premiums in the financial markets. monetary policy in the euro area has staved off deflation but inflation is still far from the levels consistent with monetary stability. economic activity in italy appears less dependent on the expansionary stance of monetary and fiscal policies. the consolidation of the recovery requires us to proceed with the economic reform effort. prudent budgetary policies will help make markets more confident in the reduction of the public debt - to - gdp ratio. lending to households and firms is expanding and loan quality is improving, partly thanks to the successful handling of the most critical situations in the banking sector. the reduction in non - performing loans must continue, exploiting the favourable economic conditions. competitive pressures and a challenging regulatory environment have made it urgent for banks to continue to limit costs and to fully recoup profitability, including through additional mergers. these needs are especially pressing in the mutual banking sector, where the 2016 reform must be implemented in toto. notwithstanding the progress made since the outbreak of the crisis, the institutional arrangements of the european union and of the euro area remain a work in progress. diminished trust among member states has led to a sterile conflict between calls for risk reduction versus those for risk sharing. these proposals are instead complementary. only by acknowledging this can solutions be found from which all countries can benefit. recent economic developments the economic expansion is increasingly broad based at global level. according to the estimates of the main international institutions, in 2017 world output returned to growth at a rate of more than 3. 5 per cent ; this year it is expected to rise by almost 4 per cent. the favourable outlook remains vulnerable to the repercussions of possible trade restrictions and to a potentially abrupt increase in risk aversion in the markets. domestic demand in the euro area is being sustained by rising employment and very accommodative financing conditions. exports are continuing to improve, driven by the uptick in foreign demand. according to the eurosystem ’ s forecasts, this year output will expand by 2. 3 per cent, a similar pace to that recorded in 2017. inflation remains low, however, reaching 1. 3 per cent in january ; core inflation also continues to be weak, partly because of the effects of wage moderation in many economies