pandemic level. we know that the fight against inflation comes at a cost. the quick succession of interest rate hikes came on top of a rapid rise in prices. after several years of weak income growth, household purchasing power fell last year ( chart 6 ). many people have less to spend, and some people are having difficulty making ends meet. if the economy evolves as we now expect, additional policy rate hikes will not be needed. given lower inflation and prospects that wages will rise faster than prices further out, many people will see an increase in their purchasing power and lower chart 6 weak income growth real disposable income. index. 2019 = 100 sources : statistics norway and norges bank norges bank economic perspectives 2024 chart 7 wide differences across industries output growth in the current quarter according to the regional network. seasonally adjusted. percent construction retail trade manufacturing services oil services source : norges bank debt servicing costs. at the same time, we must be prepared for somewhat higher unemployment. the cost of reducing inflation is also being felt by businesses ( chart 7 ). the interest rate hikes have hit construction and retail trade particularly hard. the policy rate affects the economy broadly and cannot be used to fine - tune developments in individual sectors. nevertheless, when we set the policy rate, we are conscious that pronounced impacts on individual industries can have more persistent effects which may weigh on the economic outlook. even so, our primary objective remains the same. the easing of inflation is of benefit to the entire economy, including the most interest rate sensitive sectors. if developments turn out as we now expect, inflation will return to target without a sharp rise in unemployment, thanks in part to the effective interaction of economic policy. a system of coordinated wage determination, as is the case in norway, where the parties give weight to employment, reduces the risk of wage - price spirals. in interaction with flexible inflation targeting, this reduces the cost of reducing inflation, as the holden commission recently concluded in its report on challenges to wage formation and the norwegian economy. 13 a year ago, it was our view that the policy rate was close to peaking ( chart 8 ). that didn ’ t happen. demand held up longer than expected, and business costs rose more than anticipated. moreover, the krone depreciated. the result was a further rise in inflation, which is why the policy rate has turned out to be higher than we projected one year ago. we could always forecast the policy rate

that we and other investors are doing is making an impact. for instance, we note that the share of our portfolio companies with concrete and realistic plans for achieving net zero has increased. we also find that because the gpfg is large, the companies listen to us. and we see that when we publish our voting intentions in advance of general meetings, other investors follow. 17 as owners we not only have rights but also obligations. for many companies, the gpfg is among the largest shareholders. this also entails responsibility. we cannot leave the task of ownership to others. at the same time, there are dilemmas. we do not want the gpfg to be perceived as a political actor. but when we seek to influence companies, it may appear that way. as the sverdrup commission pointed out in its report the fund in a changing world, this balancing act may become more difficult ahead. a world of growing conflicts may blur the boundary between the economic and political spheres. 18 we already see that in some markets, responsible investment practices are being politicised. in the us, many large investors have therefore lowered their climate ambitions. in exercising our ownership rights we must therefore act responsibly ourselves. we must be ambitious, but our ambitions must be realistic. we must be transparent, reliable and predictable. our expectations and views must be knowledge - based and rooted in internationally recognised standards and principles. we must be clear about the fact that the gpfg conducts its active ownership in pursuit of its long - term financial objective. this will contribute to preserving the gpfg ’ s legitimacy globally and to fostering its growth and sustainability. conclusion let me conclude. the leitmotif today has been trust – the importance of trust in the value of money and trust in the gpfg and the way it is managed. as an institution, norges bank is shown strong trust. the bank manages vast assets on behalf of the norwegian people and has been given a large degree of autonomy in interest rate setting. in performing the tasks we have been given, we make judgements and choices that can have substantial consequences for people ’ s finances. while central banks in earlier times were opaque about their reasoning, we try to be as transparent as possible about how we carry out our 17 analyses have shown that when the gpfg publishes its voting intentions in advance of general meetings, the effect doubles. see fahlenbrach, r., n. rudolf and a