will then slip. in such situations, the bank will therefore give considerable weight in its conduct of monetary policy to bringing inflation back to target. in the bank ’ s latest monetary policy report, inflation was projected to remain somewhat below target in the years ahead, against the background of prospects for moderate wage growth in the wake of the fall in oil prices and the need for economic restructuring, among other things. rather than operating a strict inflation targeting regime and lowering the key policy rate, norges bank has chosen to bring inflation back to target more slowly, in the light of firming growth in the norwegian economy and decreasing unemployment. higher capacity utilisation and prospects for increased inflation abroad imply that the risk of too - low inflation is small. the bank gives weight to the expectation that inflation will pick up gradually from today ’ s level. 3 / 8 bis central bankers'speeches real economic considerations in the conduct of monetary policy since 2001, norges bank has gradually given more weight in its conduct of monetary policy to a reasonable trade - off between the path for inflation and the path for output and employment. over this period, monetary policy has gone from “ underpinning fiscal policy ” to being the first line of defence in stabilising the economy. norges bank ’ s role in stabilising the economy is clearly defined in the draft objects clause, which reads “ the bank shall otherwise contribute to high and stable output and employment ”. this formulation differs somewhat from the usual wording in other central bank acts. in most central bank legislation, the central bank ’ s primary purpose is limited to the responsibility for maintaining price stability and for performing tasks relating to financial stability, in some cases supplemented by a more general objective, such as underpinning the government ’ s economic policy. in some central bank acts, however, high employment is included as one of the central bank ’ s primary objectives, as is the case in the us. a so - called dual mandate was established for the federal reserve, where the objectives of full employment and price stability are put on an equal footing. in practice, monetary policy conducted by a central bank with a dual mandate will not necessarily differ from that of a central bank operating a flexible inflation - targeting regime. a central bank with a flexible inflation - targeting regime will also be concerned with the level of employment. in the draft of the new central bank act, maintaining monetary stability is the primary objective. the proposal does not provide for a dual mandate for monetary policy. this is

first to express this idea clearly during the debate in norway was per schreiner, director general in the ministry of finance at the time. he wrote the following in 1982 : 4 “ it has been a common belief in the nordic countries for a long time that it was possible to make a political choice between price stability and full employment. there are strong indications that this option does not exist [ … ] personally, i am no longer in doubt that controlling inflation is essential to achieving other social objectives. ” norway adopted a nominal anchor when the devaluation policy was abandoned in 1986. we adopted an inflation target in the spring of 2001. section 1, first paragraph, reads : “ monetary policy shall be aimed at stability in the norwegian krone ’ s national and international value, contributing to stable expectations concerning exchange rate keynes, j. m., ( 1923 ) “ notes for lecture to the national liberal club ”, reprinted in “ collected writings of john maynard keynes ”, vol. xix, macmillian, london, 1981. a price level target means that inflation that is too high for a period must be counteracted by negative inflation in the subseqent period. an inflation target, on the other hand, permits “ base drift ”, which means that prices do not have to return to a specific level. see discussion in bjerve, p. j. ( 1981 ) “ kva hende i norge i 1970 - ara - konjunkturpolitisk? ”, sosialøkonomen no. 5 1981, pp 10 - 21. schreiner, p. ( 1982 ) “ er ola nordmann smart nok? den fulle sysselsetningen i fare! ”, universitetsforlaget. developments. at the same time, monetary policy shall underpin fiscal policy by contributing to stable developments in output and employment. norges bank is responsible for the implementation of monetary policy. norges bank ’ s implementation of monetary policy shall, in accordance with the first paragraph, be oriented towards low and stable inflation. the operational target of monetary policy shall be annual consumer price inflation of approximately 2. 5 per cent over time. [ … ] ” section 1 of the regulation states that in addition to sustaining the rate of inflation at approximately 2½ per cent over time, monetary policy shall also contribute to stable developments in output and employment. the mandate therefore establishes a flexible inflation target for monetary policy where variations in both output