diversification is further improved. a more even distribution of the fund ’ s ownership will provide us with the opportunity to take part in value creation in regions with strong growth. this implies a reduction in the allocation to european equities and an increase in the allocation to the americas and emerging economies. high economic growth in asia may provide sound returns on investments in that region, even though today ’ s equity prices already reflect expectations of higher growth in eastern than in western regions. a more even distribution will nonetheless improve the trade - off between risk and expected rewards. petroleum revenue spending norway as an oil nation stumbled at the start. the current account surplus at the end of the 1960s had reversed to a deficit of 12 percent of gdp by 1977. the deficit was three times as large as that recorded by italy and spain last year. the international monetary fund came bis central bankers ’ speeches knocking at norway ’ s door. fiscal policy had to be tightened and many norwegians experienced a decline in income. norway was hit by oil price shocks in the following years and economic reforms were implemented in several areas. after some years, the deficits had been turned into surpluses and transfers could be made to the petroleum fund. norway ’ s experience from its first 30 years as an oil - producing nation led to the introduction of the fiscal rule, which has been a key element of norwegian economic policy for the past decade. in 2001, the storting laid down guidelines for the phasing - in of petroleum revenues into the norwegian economy, establishing two main principles : economic policy must contribute to stable economic developments and be sustainable over time. by linking petroleum revenue spending to the expected real return on the fund – and not to current petroleum revenues – the fiscal rule provided for a gradual and sustainable phasingin of the revenues. if we can restrict spending to the return, the fund will never shrink in absolute terms. norway will also be less vulnerable to fluctuations in current petroleum revenues. the government has stated that the expected annual return on the fund will be close to 4 percent over time. in the initial years, the actual return, adjusted for inflation and costs, was close to 4 percent. in recent years, with the financial crisis and the sovereign debt crisis, the real return has been lower, averaging about 2½ percent since 1998. we should be careful about taking a rear - view mirror approach to forming expectations about the future. equity prices fluctuate considerably and there is a possibility that the results of the past few

the 2019 u. s. monetary policy forum, sponsored by the initiative on global markets at the university of chicago booth school of business, new york, new york, february 22 ; and jerome h. powell ( 2019 ), “ monetary policy : normalization and the road ahead, ” speech delivered at the 2019 siepr economic summit, stanford institute of economic policy research, stanford, california, march 8. 3 one reason for caution is the risk of building financial market imbalances, such as currently elevated levels of risky corporate debt. in my view, it is better to address such financial imbalances by activation of our countercyclical capital buffer, rigorous use of stress tests, and beefed - up monitoring of leveraged lending than by monetary policy. 4 see lael brainard ( 2016 ), “ the ‘ new normal ’ and what it means for monetary policy, ” speech delivered at the chicago council on global affairs, chicago, illinois, september 12. 5 5. see sharon kozicki ( 2019 ), “ monetary policy strategies for the federal reserve : discussion of practical considerations ( pdf ), ” presentation at the conference on monetary policy strategy, tools, and communications practices, federal reserve bank of chicago, june 5. 6 see lars e. o. svensson ( 2019 ), “ monetary policy strategies for the federal reserve ( pdf ), ” paper prepared for the conference on monetary policy strategy, tools, and communications practices. federal reserve bank of chicago, june 5. 3 / 4 bis central bankers'speeches 7 see katharine g. abraham and john c. haltiwanger ( 2019 ), “ how tight is the labor market? ( pdf ) ” paper prepared for the conference on monetary policy strategies, tools, and communications practices, federal reserve bank of chicago, june 5. 8 see board of governors of the federal reserve system ( 2019 ), “ panel 1 : what does full employment look like for your community or constituency? ” at the conference on monetary policy strategy, tools, and communications practices, federal reserve bank of chicago, june 5 ; and board of governors of the federal reserve system ( 2019 ), “ panel 2 : transmission of monetary policy to the economy : beyond the headlines, ” at the conference on monetary policy strategy, tools, and communications practices, federal reserve bank of chicago, june 5. 4 / 4 bis central bankers'speeches