growth appears to be weaker than previously projected. this is partly because the after - effects of the financial bubble that burst appear to be more substantial and more protracted than previously assumed. it is expected that a number of countries will reduce their interest rates again, and that the level of interest rates in other countries will remain low for some time. in norway, price inflation is lower than implied by the inflation target and will remain low in the period ahead. the krone has remained strong, partly due to the fall in international interest rates, weakening the impact of our interest rate reductions. growth in the norwegian economy is now likely to be weak. although private consumption continues to show strong growth and oil investment is providing an impetus to the norwegian business sector, labour market developments have been weaker than expected in our previous inflation report. employment has fallen and unemployment is on the rise. house prices are falling and many commercial properties are vacant. it now appears that fiscal policy will have a more neutral impact on overall demand, and growth in public consumption and employment is no longer rising. fiscal policy as drawn up in the revised national budget will therefore not contribute to locking in the strong krone. one encouraging development is that wage growth appears to have moderated more quickly than expected. this may partly be explained by the interim wage settlement this year, as in 1999. however, with greater awareness on the part of employers in the public sector and a low level of activity in some business sectors, the risk that wage growth will again pick up seems to have been reduced. norges bank has previously stated that a rapid and pronounced change in the interest rate would be appropriate if, for example, heightening turbulence in financial markets or a cost - push shock resulting from wage negotiations indicate that confidence in monetary policy is in jeopardy. similarly, it would be appropriate to change the interest rate in larger steps if the outlook points to inflation that deviates substantially from the inflation target over a longer period. we have experienced a period of monetary policy easing. this period is not over. the next assessment of the interest rate will take place at norges bank ’ s executive board meeting on 25 june. our next inflation report will be presented at the same time.

inflation was higher and broadly as projected. international inflation has also declined markedly and moved closer to inflation targets. many central banks have cut their policy rates. the market expects further rate cuts ahead, but fewer rate cuts than previously. since the previous monetary policy meeting, the krone has been slightly weaker than assumed. we set the policy rate based on conditions in the norwegian economy, but as a small open economy, we are affected by international developments. the new us administration has announced trade policy changes, but it remains uncertain which measures will be enacted. should tariffs be raised, global growth will likely slow, but the implications for price prospects in norway are uncertain. the committee will have received more information about economic developments ahead of its next monetary policy meeting in march when new policy rate forecasts will also be presented. 2 / 2 bis - central bankers'speeches