in the economy. gradually, the krone began to show wider fluctuations. the experience of the last half of the 1990s demonstrated that monetary policy cannot fine - tune the exchange rate. developments in international financial markets led to more pronounced fluctuations. high petroleum revenues, fiscal slippage and expectations of increased use of petroleum revenues also contributed to this. wage growth increased. the exchange rate was therefore no longer suitable as a nominal anchor. a little less than two years ago, the storting and the government adopted new guidelines for economic policy. according to the mandate, norges bank shall orient monetary policy towards low and stable inflation. the inflation target is set at 2. 5 %. the introduction of new guidelines for economic policy in march 2001 and the conduct of fiscal policy have altered the interplay between economic policy components. in the past, growth in public spending was to be reduced or other fiscal policy measures implemented if the labour market was tight and wage growth high. with today ’ s guidelines, it is primarily monetary policy that is tightened in a similar situation. the rise in labour costs is important when norges bank assesses the inflation outlook and sets interest rates. excessive wage growth, in both manufacturing and other industries, will affect the internationally exposed sector through two channels. first, high wage growth will in itself reduce earnings and employment. second, the interest rate will be increased. normally, this will lead to an appreciation of the krone, with a further reduction in earnings and employment. the manufacturing sector will therefore feel the effects of excessive wage growth to an even greater extent than earlier. since the new fiscal guidelines, which entail an increased use of petroleum revenues, were introduced during a period with a tight labour market, it was to be expected that the krone would be strong at times. interest rates influence inflation throught their impact on domestic demand and on the market for nok. when interest rates rise, it becomes more profitable to save and more costly to borrow. this dampens consumption and investment and thereby aggregate demand. lower demand in turn curbs the rise in prices and wages. higher interest rates make it more attractive to invest in nok and borrow in foreign currency. therefore, higher interest rates normally lead to an appreciation of the krone. this makes imported goods cheaper. in addition, a strong krone reduces activity, profitability and the ability to pay in the internationally exposed sector. it is important to be aware of the relationships between employment, output and inflation. if there is a

picture terms, following the leadership core and keeping in alignment ”, strengthen “ confidence in the path, theory, system and culture of socialism with chinese characteristics ”, and uphold “ general secretary xi jinping ’ s core position on the party central committee and in the party as a whole as well as the party central committee ’ s authority and its centralized and unified leadership ”. moreover, we will thoroughly implement the guidelines of the fifth plenary session of the 19th cpc central committee and the 2020 central economic work conference, practice the new development philosophy at the new development stage, focus on promoting high - quality development, and pursue financial supply - side structural reform as our main task, so as to build a modern central bank system. we will also press ahead with our efforts to ensure “ six stabilities ” and “ six guarantees ” to provide strong and effective financial support for speeding up the building of a new development paradigm and commemorate the centenary of the founding of the party with remarkable achievements! 2 / 2 bis central bankers'speeches