ida wolden bache : policy rate raised to bring down inflation 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, 14 december 2023. * * * accompanying presentation to the speech introduction slide : policy rate raised to 4. 5 percent norges bank is tasked with keeping 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. the monetary policy and financial stability committee judges that the best trade - off between these considerations is achieved by raising the policy rate to 4. 5 percent now. the policy trade - offs are challenging. the policy rate has been raised considerably in recent years in order to tackle the high level of inflation. unemployment is low, and the employment rate is high, which is a good thing. but the economy is cooling down, and we have yet to see the full effects of the past rate hikes. many households are facing tighter budgets, and for some it is difficult to make ends meet. if we raise the policy rate too much, the economy will contract more than needed. that is something we want to avoid. on the other hand, inflation is still too high. if we tighten monetary policy insufficiently, prices could continue to rise at a rapid pace. high and variable inflation imposes substantial costs to society and hits low - income groups and those who can least afford it hardest. the krone has continued to depreciate through autumn. an increase in the policy rate now reduces the risk of inflation remaining high for a long period of time. if the economy evolves as currently envisaged, there will not be a need for additional rate hikes. slide : inflation is markedly above target let me say a few words about the background for the rate decision and committee's assessments. inflation is just below 5 percent, which is lower than projected in september when our previous projections were published. but inflation is still markedly above target. excluding energy prices, which have fallen, inflation is close to 6 percent. slide : the economy is cooling down employment is high. over the past year, the number employed has increased by 30 000. but economic activity is slowing. household consumption has decreased and been 1 / 3 bis - central bankers'speeches a little lower than we expected in september. norges bank '

the coming years. unemployment is set to edge up to around pre - pandemic levels. 2 / 3 bis - central bankers'speeches wage growth is expected to slow from next year. but given a slower rise in prices, wages are expected to rise faster than prices in the years ahead. there is uncertainty about future developments in the norwegian economy. if business costs continue to accelerate rapidly or the krone turns out to be weaker than projected, price inflation may remain higher for longer than currently projected. in that case, the committee is prepared to raise the policy rate again. if there is a more pronounced slowdown in the norwegian economy or inflation declines more rapidly, the policy rate may be lowered earlier than currently envisaged. 3 / 3 bis - central bankers'speeches