interest rates, the interest rate will be increased. if it appears that inflation will be lower than 2½ per cent with unchanged interest rates, the interest rate will be reduced. it is equally important to avoid an inflation rate that is too low, as it is to avoid an inflation rate that is too high. the expression " it appears that " refers to our best estimate of inflation two years ahead. norges bank publishes its inflation projections in the inflation report three times a year ( every four months ). the inflation reports include both a point estimate and an uncertainty interval around the projection. in the most recent inflation report which was published in june, we believed that there was approximately a 75 per cent chance that inflation would be between 2 and 3 per cent in 2003. we also believed that the probability that inflation would be higher than 2 ½ per cent was about the same as the probability that it would be lower than 2 ½ per cent. growth forecasts for the global economy this year have been lowered substantially. earlier, a decline in some regions has often been counteracted by an upswing in other regions. the changes now appear to be more concurrent than in 1975, 1982 and 1991. the summer months have brought a great deal of bad news from the global community. after the tragic events on 11 september, the uncertainty is even greater than before. industrial output is declining markedly in all major regions in the world economy. the situation has shifted rapidly in the us, following strong growth throughout most of the 1990s. the contagion effect from the us to europe has been more pronounced than expected. channels other than trade have probably had a greater impact than expected. expectations can be affected quickly. high correlation between share prices in different countries may be an important carrier of contagion. enterprises with worldwide operations may be another. the economic indicators show a clear slowdown in growth in europe ’ s industrial output. the effect on the swedish economy has been severe, resulting in a record - low exchange rate. one swedish krone now costs approximately 80 norwegian øre. this is 30 per cent less than 10 years ago. vulnerable emerging economies with high government debt must pay very high interest rates to borrow capital. many central banks have reduced interest rates, most recently 17 and 18 september. interest rates have been reduced because of the prospect of a downturn in each of these economies. real interest rates are low in many countries. the inflation component that is driven by domestic wage and price increases is still high. growth

randal k. quarles, “ supervision and regulation report ” ( testimony before the committee on banking, housing, and urban affairs, u. s. senate, washington, d. c., may 12, 2020 ). return to text 2 i have recently spoken on the broader strains in the financial system and the significant efforts made to address them. see randal k. quarles, “ what happened? what have we learned from it? lessons from covid - 19 stress on the financial system ” ( speech at the institute of international finance, washington, d. c. ( via webcast ), october 15, 2020 ). my remarks today principally describe interventions focused on the banking sector. return to text 3 for a full list of such actions, see board of governors of the federal reserve system, “ supervision and regulation report ( pdf ), ” november 2020. return to text 4 board of governors of the federal reserve system, sr 20 – 18 / ca 20 – 13 : “ joint statement on additional loan accommodations related to covid - 19. " return to text 5 board of governors of the federal reserve system, federal deposit insurance corporation, office of the comptroller of the currency, national credit union administration, and state financial regulators, “ interagency examiner guidance for assessing safety and soundness considering the effect of the covid - 19 pandemic on institutions ( pdf ), ” june 2020. return to text 6 board of governors of the federal reserve system, federal deposit insurance corporation, and office of the comptroller of the currency, “ community reinvestment act ( cra ) consideration for activities in response to the coronavirus frequently asked questions ( faqs ) ( pdf ), ” may 27, 2020. return to text 7 deliberate outreach to community development financial institutions ( cdfis ) and minority depository institutions ( mdis ) has been a key aspect of these efforts. see lael brainard, “ modernizing and strengthening cra regulations : a conversation with minority depository institutions ” ( speech at the national bankers association ( via webcast ), october 15, 2020 ) ( noting preliminary data showing cdfis, mdis, and other community banks as source of 73 percent of all paycheck protection program loans to minority - owned businesses ) ; see also board of governors of the federal reserve system, “ federal reserve board updates frequently asked questions to clarify the board and department of treasury ’ s expectations regarding lender underwriting