rate, weight is also given to stabilising developments in output and employment. for monetary policy to contribute to stabilising developments in output and employment, there must be confidence that the inflation target will be reached. inflation will not be at target at all times, but if there is confidence in monetary policy, expected inflation will be close to the inflation target over time, which in itself contributes to stabilising inflation. norges bank ’ s communication of monetary policy aims to stabilise inflation expectations by giving the reasons for and explaining interest rate setting. by publishing its interest rate forecasts and monetary policy strategy, norges bank has made it easier for others to understand and evaluate monetary policy. it is my objective to continue and enhance the bank ’ s analysis and communication. since march of this year our monetary policy reports have included a summary of the executive board ’ s discussion of monetary policy prior to the reports. chart : surplus liquidity in the banking system to be effective, the key policy rate must have an impact on market rates. norges bank supplies liquidity to banks to bring short - term money market rates down closer to the key policy rate. surplus liquidity in the banking system is kept as sight deposits at norges bank. the redistribution of interbank liquidity does not function adequately. in 2010 norges bank had to maintain high liquidity in the banking system to keep short - term money market rates close to the key policy rate. to dampen demand for central bank liquidity and promote increased activity in the money market, norges bank ’ s executive board approved changes in the system for managing liquidity in the banking system in december 2010. under the new regulation, only a certain amount of banks ’ deposits – a quota – will bear interest at the key policy rate. deposits in excess of this quota will bear a lower interest rate. this will give banks a stronger financial incentive to redistribute liquidity among themselves, making the norwegian money market function more effectively. the new system is expected to take effect from 3 october of this year. 3. from financial crisis to debt crisis chart : general government gross debt the experience of recent years has shown the costs of financial instability in many countries. global economic growth has recovered, but the effects of the financial crisis are still visible and will be so for some time ahead. financial crises tend to be followed by debt crises. fiscal policy was used actively in most countries to dampen the effects of the financial crisis. the mistakes

mainland norway growth in the norwegian economy has been solid since autumn 2016. at the same time, labour market conditions have improved considerably. the number of employed has increased by more than 100 000, and unemployment has declined. solid global growth, higher oil prices and low interest rates have contributed to lifting growth. the enterprises in norges bank ’ s regional network reported rising output growth through 2018, particularly for oil service providers thanks to the rebound in petroleum investment on the norwegian shelf following several years of decline. there was also a pick - up in exports from oil service companies. chart : employment as a share of the population after some years of solid growth, spare capacity has gradually diminished. at the end of 2018, capacity utilisation appeared to be close to what we regard as a normal level. employment also appears to have returned to a more normal level. owing to a high employment rate, the number of employed persons as a share of the working - age population is now close to the level prevailing before the sharp fall in oil prices in 2014. in 2018, employment rose in most sectors of the norwegian economy, including oil - related industries. more people entered the labour market, but unemployment nonetheless edged down. there are signs of growing pressures in the economy. a rising number of regional network contacts report little spare capacity. a number of employers report difficulties in finding skilled and experienced labour. in the wake of the oil price decline, wage growth has been moderate. the improvement in the labour market has contributed to a pick - up in wage growth in recent years. at the same time, inflation has been high. as a result, real wage growth has been low, with little improvement in household purchasing power. chart : consumer prices 2 / 3 bis central bankers'speeches consumer price inflation edged up through 2018, primarily reflecting a sharp increase in electricity prices. underlying inflation also moved up, partly owing to the pick - up in wage growth and higher imported inflation. annual consumer price inflation ( cpi ) was 2. 7 percent in 2018. persistently high debt growth has added to the vulnerability of the household sector. high house price inflation has fuelled debt growth. in 2018, house price inflation was low, and debt growth eased somewhat. debt nevertheless grew faster than household disposable income. because of a high household debt burden, the effect of an interest rate rise will likely be stronger than earlier. chart : policy rate the monetary policy assessments through 2018 attached weight to the fact that the monetary stance is expansionary