an interest rate change will occur within two years. two years is thus a reasonable time horizon for attaining the inflation target, and also makes it possible to avoid unnecessary output and employment variability. see also the formulation of the regulation about contributing to stable developments in output and employment. if we should attempt to attain the inflation target in the very short term, by lowering the key rate and thereby contributing to a depreciation of the krone and higher price inflation, we would very probably be compelled to raise the interest rate even more a year from now in order to attain the inflation target than we did the last time we raised interest rates. such a short - term policy would have contributed to greater demand and output instability. with the relatively long time horizon that has been chosen, monetary policy can contribute to stable developments in output and employment. however, situations may arise where more than two years or less than two years is required to attain the inflation target. this will depend on what disturbances the economy is exposed to. norges bank will communicate such a change in the time horizon. 4. monetary policy and competitiveness monetary policy cannot be used to influence the size of the internationally exposed sector over time. this is primarily determined by wage and income formation, fiscal policy, including the use of petroleum revenues over the government budget and the adaptability and efficiency of the economy. the new monetary policy mandate is linked to the new fiscal policy guideline. when the new guidelines were adopted in march 2001, norges bank pointed out that, in isolation, a gradual phasing in of petroleum revenues could contribute to deteriorating conditions for the internationally exposed sector. norway ’ s fiscal policy will stimulate demand in the public and sheltered sectors. consequently, internationally exposed industries may have difficulties recruiting labour and may face higher labour costs. the contest for labour may result in a deterioration in competitiveness internationally. the fact that economic mechanisms function in this way was pointed out in report 29 ( 2000 - 2001 ) to the storting from the stoltenberg government and in annex 4 to report 1 ( 2001 - 2002 ) to the storting from the bondevik government a deterioration in competitiveness can be caused by two factors : high wage growth, or a nominal appreciation of the krone. in isolation, an expansionary fiscal policy must lead to a tightening of monetary policy if the inflation target is to be attained. without such a tightening, the labour market would be tighter, and competitiveness would deteriorate as a result of rising wage

. in 2022, norges bank decided to raise the countercyclical capital buffer rate for banks to 2. 5 percent, effective from march 2023, which brings the rate back to its pre - pandemic level. norges bank continuously and closely monitors financial market developments and has a contingency framework for taking measures required to safeguard financial stability if needed. let me conclude. the current high rate of inflation follows a long period of low and stable inflation in our part of the world. some of the driving forces that kept inflation low in the decades before the pandemic may be going into reverse. globalisation has been met with gradually growing opposition. demographic trends are changing. combined, this could make the job of keeping inflation low more demanding. 4 / 5 bis - central bankers'speeches the global economy will increasingly be impacted by climate change and the need to reduce emissions. understanding the economic effects of climate change and the energy transition is essential for making forecasts and the right trade - offs in the conduct of monetary policy. this is therefore defined as a focus area in norges bank's strategy 2025. the main contribution monetary policy can make to the transition is to ensure low and stable inflation. a flexible and forward - looking inflation targeting regime, where we look through short - term inflation fluctuations, is a good basis for addressing the structural changes we are facing. a small open economy like norway will be exposed to shocks, as we have acutely experienced in recent years. economic policy cannot shield the economy totally from shocks that may arise, but can dampen their impact. a framework that provides monetary policy predictability makes it easier to succeed. thank you for your attention. 5 / 5 bis - central bankers'speeches