ida wolden bache : high policy rate for some time introductory statement by ms ida wolden bache, governor of norges bank ( central bank of norway ), at the press conference following norway's announcement of the policy rate, oslo, 2 november 2023. * * * accompanying charts to the speech chart : policy rate unchanged at 4. 25 percent today, norges bank's monetary policy and financial stability committee announced its decision to keep the policy rate unchanged at 4. 25 percent. norges bank's task is to keep inflation low and stable. the operational target is inflation of close to 2 percent over time. we are also mandated to help keep employment as high as possible and to promote economic stability. inflation is markedly above target. high and variable inflation has substantial costs a€ “ to individuals, businesses and society. rapid and unexpected price increases hit lowincome groups and those who can least afford it hardest. in order to return inflation to target, we have raised the policy rate substantially over the past couple of years. in september, the committee signalled that there would likely be one additional rate hike, most probably in december. our september forecast indicated that the policy rate would lie around 4. 5 percent through next year. new forecasts have not been prepared for this monetary policy meeting, but we have assessed new information against the september forecasts. chart : global inflation is moving down inflation in many trading partner countries is also high but receding. since spring last year, many central banks have raised policy rates significantly. recently, a number of central banks have kept rates on hold, and the market's interpretation of the outlook indicates that policy rates among trading partners are getting close to peaking. higher interest rates and elevated inflation have dampened growth among trading partners, although activity was somewhat stronger in the third quarter than we had envisioned. chart : the krone has depreciated the krone depreciated considerably over spring, before regaining some strength through summer. the krone has recently depreciated again and been weaker than we foresaw in september. the krone exchange rate is not a policy target. when the movement in the krone is of concern to us, it is because a weaker krone means higher imported goods inflation. that may lead to a situation where domestic inflation remains elevated despite a decline in international inflation. chart : low growth in the norwegian economy 1 / 3 bis - central bankers'speeches economic growth in norway is

of capital as basically desirable. it has given developing countries increased borrowing facilities to mitigate acute effects of other economic shocks, be they crop failures or lower prices for major export products. the process has also led to increased investment in developing countries. at the same time, investors in industrialised countries have had new opportunities of diversifying risk and obtaining the higher return that may come from projects in developing countries. this should have tended to improve the utilisation of capital in individual countries as well as in the world as a whole. some observers argue, for example, that the efficient capital markets in the united states were a major factor behind the favourable economic trend there in the 1990s, a trend that also benefited developing countries. but this has not been a straight - forward matter. when the process was initiated, the effects that capital liberalisation in recent decades has had on the stability of both national and global capital markets were clearly underestimated. there has now been a change in the international discussion. much has been written about the ways in which deregulations were implemented, both in countries like sweden and in developing countries. the process was sometimes too rapid, sometimes wrongly designed and often lacked a thorough assessment of the consequences. these lessons are now being taken into account in advice to countries that have not yet opened their markets. in the international discussion there is also a greater understanding of temporary restrictions on short - term capital movements, although the effects of taxing short - term capital, as chile has done, or exchange controls must be considered uncertain. just as investment capital rapidly flows into a country when economic prospects are bright, so it has tended to be rapidly withdrawn when those who manage the funds suspect that their assets are threatened by growing economic problems. the major economic crises in recent years provide examples of this, in mexico, asia, russia, brazil and, most recently, turkey and argentina. it is, for that matter, a process that sweden experienced in the early 1990s. when our crisis spread from manufacturing to the economy as a whole, real interest rates shot up and the bank crisis loomed, foreign investors pulled in their horns. that in turn added to the difficulties in defending the fixed exchange rate and led to the krona ’ s fall. at the same time, the swedish case exemplifies a couple of matters that are also relevant here. our crisis was largely self - inflicted ; with a more adequate economic policy in the 1980s, the flight of capital could have been avoided. and even though