of the oil price fall in 2014. nor are market 2 / 7 bis central bankers'speeches expectations of future interest rates necessarily aligned with norges bank ’ s interest rate path. on the contrary, the two curves have often diverged to some extent, particularly at somewhat longer horizons. norges bank ’ s analyses nonetheless indicate that we are successful in steering market expectations in the desired direction ( brubakk et al ( 2017 ) ), for example by publishing the interest rate path. the analyses also find that central bank and market revisions of interest rate paths in the periods between monetary policy meetings are strongly correlated. this suggests that market participants have a good understanding of the central bank ’ s response pattern and of how monetary policy will react to new information about economic developments. need for alternative reference rates chart : from key rate to money market rate … market expectations of future interest rates are reflected in the norwegian monetary market rate – three - month nibor. this rate can be decomposed into the average expected key policy rate over the next three months and a risk premium, usually referred to as the money market premium. over time, three - month nibor has tracked the key policy rate. three - month nibor is a so - called reference rate, used as a basis for the pricing of many financial contracts in norway, such as loan contracts and interest rate swaps. in its capacity as a reference rate, nibor is a key element linking the key policy rate with the interest rates facing households and enterprises. chart : … and on to mortgage rates the interest rates paid by households and enterprises on their bank loans are set to cover banks ’ costs as well as to provide a return on equity for the banks ’ shareholders. a large share of banks ’ costs consists of the cost of wholesale loans to fund retail lending. prices for these loans will typically be formulated as a premium on top of three - month nibor. changes in nibor will thereby affect banks ’ funding costs and lending rates for households and enterprises. reference rates are used to hedge against future changes in the general interest rate level. the pricing of bank bonds can serve as an example. when the interest rate on a bond is set at the reference rate plus a fixed risk premium, both the bank ’ s interest expenses and the bond purchaser ’ s interest income will depend on the level of the reference rate – and thereby on the general interest rate level. when the two parties agree to the contract, they can then focus on the contract ’

øystein olsen : economic perspectives annual address by mr øystein olsen, governor of the norges bank ( central bank of norway ), to the supervisory council of norges bank and invited guests, oslo, 14 february 2013. the underlying data series can be found on the norges bank ’ s website. * * * introduction life was blessed for these people, living in a small capital in a small country, geographically outside the world ; geographically, but not economically. the bright springs bubbled up as never before (... ). they were sent sparkling to the sky by popping corks over tables set for a feast (... ) but all those who lived by the banks of the bright springs knew that they could not spring eternal. 1 johan borgen ’ s portrayal of norway as it was almost a hundred years ago could also serve as an apt description of today ’ s norway, even though the environment was entirely different at that time. five years after the financial crisis started in earnest, growth is weak and unemployment high in many countries. the economic situation in norway stands in stark contrast to developments abroad. norway ’ s economy is still growing and unemployment remains low. there is a tendency to see ourselves as a country apart. norway ’ s oil and gas resources provide an economic base that few other countries enjoy. income levels are among the highest in the world and the people of norway are generally highly educated. our access to natural resources makes a significant contribution to our prosperity. at the same time, our increasing dependence on oil and gas increases the vulnerability of the norwegian economy. we know that neither of these sources will spring eternal. the theme of my speech this evening is how to enhance the resilience of the norwegian economy. continued weak growth prospects, but less fear when the financial crisis washed over the norwegian banking sector in autumn 2008, we were reminded of how dependent we are on the world around us. nonetheless, the norwegian economy weathered the crisis well. after about a year, the downturn in norway was over. chart 1 : emerging economies are driving oil demand one of the main reasons is that there is strong demand for norwegian goods in countries where economic growth remains robust. the centre of gravity in the world economy is shifting. in the course of the next few decades, china will most likely be the largest economy in the world. emerging economies – with china at the forefront – are the main driving force behind the increase in demand for crude oil and other commodities. as a