line with expectations, import price inflation may reach a more normal level. if growth in the global economy picks up again as we have assumed, we expect consumer price inflation to be about 2½ per cent in two years. meanwhile, consumer price inflation may be somewhat lower due to the downturn abroad and the decline in prices for imported goods. norges bank presented its most recent inflation report in october 2001. in the light of international developments, and other factors, we considered the probability that inflation two years ahead would be lower than 2½ per cent to be greater than the probability that it would be higher. this was the basis for norges bank ’ s decision to reduce its key rate by 0. 5 percentage point to 6. 5 per cent in december. norges bank ’ s assessment of the outlook for inflation remained unchanged following the executive board ’ s monetary policy meeting on 23 january this year.

to run faster and faster and, if not exactly go for gold, at least aim for seriously higher levels of foreign exchange reserves. others argue that we should run in more than one event, pursuing not only higher reserves but also more active management of the exchange rate. so it is worth being clear exactly what we can hope to achieve in this area of our operations, and equally what we cannot. we can, and will, continue gradually to build up our official foreign exchange reserves to a respectable level in an orderly fashion in accordance with our balance sheet whenever circumstances allow us to do this. this will bring benefits, as i have indicated, in terms of lessening rand volatility and strengthening our international credit standing. the scale of our operations is, in fact, cumulatively more substantial than is sometimes recognised : over the six years i have described above, we have acquired, directly by purchases in the market, or indirectly, of the order of $ 30 billion. around $ 10 billion of this has been acquired in the past eighteen months. these are not negligible sums, particularly in relation to the size of foreign exchange activity in the rand. in the process, our operations have undoubtedly provided some moderation to the rise of the rand we have experienced over the period. this has in degree helped to alleviate some of the strains exporters and our manufacturers have faced from the rise of the rand. we fully recognise the difficulty businesses face in adjusting to those strains, and it is useful that our operations can help in this way. but our operations have to remain focused on rebuilding our reserves. it would not be sensible for us to switch to a different focus, of seeking more actively to manage the exchange rate, principally for two reasons. first, neither we nor anyone can claim with any confidence to know what would be an appropriate equilibrium exchange rate. it is much more sensible for us to pursue a stable monetary framework aimed at delivering low inflation and thereby help the market find a stable trading range for the rand - as indeed it has managed to do for extended periods over the past year. secondly, endeavouring to manage the exchange rate would jeopardise our success in delivering low inflation : countless episodes in the past around the world demonstrate that attempting to switch focus to the exchange rate means that the central bank loses control of inflation, with seriously damaging results to the prospects for sustaining growth in the economy on a continuing basis. so we can, through our continuing operations designed to rebuild the reserves, help in the