ida wolden bache : the policy rate has been raised to bring down inflation introductory statement by ms ida wolden bache, governor of norges bank ( central bank of norway ), at the press conference following norway's announcement of the policy rate, oslo, 4 may 2023. * * * accompanying charts to the speech chart 1 : policy rate raised by 0. 25 percentage point norges bank's monetary policy and financial stability committee decided to raise the policy rate by 0. 25 percentage point to 3. 25 percent. norges bank's task is to keep inflation low and stable. the operational target is inflation of close to 2 percent over time. we are also mandated to help keep employment as high as possible and to promote economic stability. chart 2 : inflation is too high inflation is now markedly above the target. in march, consumer prices were 6. 5 percent higher than one year earlier. high energy prices are a key driver of inflation, but other goods and services prices have also risen rapidly. price stability is crucial for maintaining a well - functioning economy. the policy rate is being set with the aim of bringing inflation back to the target of 2 percent. at the same time, we want to avoid a slowdown in economic growth beyond what is necessary to tackle inflation. we have not yet seen the full effects of our past rate hikes. our march forecasts indicated a policy rate increase to around 3. 5 percent this summer. new forecasts have not been prepared for this monetary policy meeting, but we have assessed new information against the forecasts we presented in march. chart 3 : international inflation has slowed inflation among trading partners is also high but has eased in many countries in recent months. gas and power prices have come down from the very high levels seen last year. problems at some us and swiss banks led to large movements in financial markets in march. global equity indexes have risen since the march report, and bond risk premiums have fallen. us and european households and firms appear to be finding it more difficult to obtain loans. chart 4 : the krone has depreciated high inflation has prompted central banks in many countries to raise policy rates quickly and more than in norway. the norwegian krone has depreciated in recent months and 1 / 2 bis - central bankers'speeches is now at its weakest level since the onset of the pandemic in spring 2020. the krone is weaker than we projected in march. activity in the

statistical basis is uncertain. statistics are published with a lag and are often subject to revision. data from different sources can provide different pictures of the situation at hand. statistical models can provide us with good support and help distinguish between news and noise in the data. they can capture time series properties in data and correlations that in many cases will be able to produce good forecasts of developments in the next months ahead. it then makes little difference whether or not the models are based on economic theory. there are certain similarities between projecting developments in the norwegian economy in the coming months and forecasting the weather. meteorologists have observed that averaging a large number of forecasting models generally produces more accurate forecasts. ysander, bengt - christer, “ award ceremony speech ”, royal swedish academy of sciences, 10 december 1989. bis central bankers ’ speeches to project consumer price inflation in the coming quarters the bank has developed a system for averaging forecasts from about 170 different statistical models, all of which are intended to project inflation in the norwegian economy in the very near term. the models are grouped into three classes, and the models within each class may contain different variables or be variants of one another2. the weights are continually adjusted on the basis of historical accuracy, so that models with better predictive power are given greater weight in the subsequent round. the bank has a similar system including almost 250 models for forecasting mainland gdp. the projections from these systems of models extend four quarters ahead in time and are published at regular intervals on the bank ’ s website. we call this apparatus sam ( system for averaging models ). for projections with slightly longer horizons, the bank parts company with weather forecasters. while meteorologists are unlikely to influence the weather with their predictions, norges bank ’ s interest rate setting can actually influence economic developments in the medium term. this places particular demands on the system of analysis and involves other demands than if the sole purpose were to make forecasts. norges bank has developed the norwegian economy model ( nemo ), which we use as an aid when drawing up one - yearahead to four - year - ahead forecasts. nemo is a model for analysing cyclical fluctuations around a long - term trend. in the medium term, the economy may in periods deviate substantially from trend, but when the fluctuations subside, we must assume that the economy is moving towards equilibrium. the model does not explain the long - term trend so we have to look