in gaza. conflicts and political tensions between countries heighten the uncertainty surrounding economic developments. at the same time, the economy and financial markets are increasingly being impacted by climate change and measures to reduce climate emissions. these trends will pose challenges to all areas of economic policy, including monetary policy. in my view, norges bank's mandate, with flexible inflation targeting, provides a sound basis for meeting potential challenges ahead. extreme weather and measures to accelerate the climate transition can have a large impact on individual prices. with flexible inflation targeting, we can see through temporary changes in inflation. but ensuring low and stable inflation over time will continue to be the most important contribution monetary policy can make to supporting the transition. last week, we published an update of our monetary policy strategy. the strategy describes how the committee interprets its mandate and how monetary policy will respond to different shocks that could hit the economy. when the strategy was first adopted in 2021, global interest rates and inflation had been low for an extended period of time. in recent years, monetary policy has faced a different set of challenges. the updated strategy articulates that we interpret our mandate to mean that considerable weight shall be given to employment – also at times when inflation deviates significantly from the target. both this clarification and the overall strategy are consistent with our conduct of monetary policy in response to the cost shock that hit the economy two years ago and does not entail a change in the conduct of monetary policy. chart : revised forecasts notwithstanding, there are lessons that both we and other central banks can take forward. we must acknowledge that our forecasts have not been that accurate in recent years. we are therefore exploring how we can improve our models and analyses. we are in the process of establishing a new data platform that will enable us to make better use of new data sources in our analytical work. we will also continue to reach out and listen to feedback going forward. the goal is to establish the best possible basis for making good decisions also when uncertainty is high, and to adapt monetary policy rapidly to a shift in the outlook. let me conclude. 4 / 5 bis - central bankers'speeches chart : in our assessment, the policy rate is sufficiently high the past years have served as an important reminder. we cannot take low and stable inflation for granted. since inflation surged in the wake of the pandemic, we have raised the policy rate significantly, and it now appears that the inflation peak is behind us. interest expenses will be high

, the social partners agreed on a wage norm of 5. 2 percent for 2023, which also turned out to be the rate of overall annual wage growth. by a good 1 / 5 bis - central bankers'speeches margin, wage growth reached its highest level since 2008. given the low growth in productivity, the pay increases led to higher business costs. chart : the krone depreciated in spring of last year, international interest rates reached the highest levels since the 2008 financial crisis, and main trading partners'policy rates rose to higher levels than our policy rate. this likely contributed to a depreciation of the krone. measured against a basket of currencies of countries from which we import goods, the krone has gradually lost value over recent years. if we look at developments against individual currencies, the picture is more mixed. the us dollar has appreciated against many currencies, including the krone. this illustrates that the krone depreciation is due not only to conditions specific to norway. in many situations, a floating exchange rate can act as a cushion for the norwegian economy, as was the case when oil prices plummeted in 2014. at that time, the krone depreciated markedly and contributed to lifting activity in the tradable goods sector. the norwegian economy could move on a different path than surrounding countries in the future too, and a floating krone will be of benefit to our economy. a floating exchange rate can reduce the cost of structural adjustments. last year, however, amid weaker growth prospects and already too high inflation, the krone depreciation made the monetary policy trade - offs more challenging. we do not have an exchange rate target for the krone. when we are concerned with the exchange rate, it is because a weaker krone means an increase in prices for imported goods. moreover, a weaker krone can lead to higher activity and increased profits in the export sector, which can in turn lead to stronger wage growth and contribute to a longer period of high domestic cost inflation. chart : we have raised the policy rate more than envisaged our assessment at the beginning of 2023 was that we were approaching the policy rate peak. but, in the course of spring, it became clear that a higher rate was required. unemployment had increased less than feared, while inflation had remained higher than expected. at the same time, high wage growth and a weaker krone would continue to push up inflation going forward.