the rise in prices we have recently observed could affect inflation in the period ahead through compensation for earlier inflation, the pass through of costs to selling prices and through expectations of future price inflation. by using various measures of underlying inflation, we seek to capture the portion of the rise in prices that may influence future inflation. it is always difficult in real time to determine which price movements will persist and which will only have a short - term effect on the cpi. an assessment of underlying inflationary pressures should probably be based on several different indicators and developments in these should be followed up by discussion and interpretation of the underlying causes. allow me to conclude. developments over the past 40 years have illustrated that the most important contribution monetary policy can make to sound economic developments in the long term is low and stable inflation. this provides the economy with a nominal anchor. in its conduct of monetary policy, norges bank operates a flexible inflation targeting regime, so that weight is given to both variability in inflation and variability in output and employment. flexible inflation targeting builds a bridge between the long - term objective of monetary policy, which is to keep inflation this is discussed in “ measures of core inflation ” in bank of england ’ s inflation report of february 2006. see www. bankofengland. co. uk. on target and provide an anchor for inflation expectations, and the more short - term objective of stability in the real economy. in some situations, it may be desirable to bring inflation rapidly back to target. in other situations, it may be desirable to apply a longer horizon. in this context, it may be appropriate to differentiate between supply - side and demand - side disturbances. the horizon must also been seen in the light of developments in house prices and debt. however, for monetary policy to function as intended, it is important that there is confidence in the nominal anchor. thank you for your attention.

shareholders and for the country. confidence in the monetary system was painstakingly restored. the bank also extended loans to private individuals. acquaintances or loan sharks were no longer the only sources of credit. the foundations had been laid to enable the economy to grow and to lift living standards. in 1874, the stock of silver was exchanged for gold. the transition to a gold standard met little opposition. the proposed currency union with denmark and sweden, however, was difficult for many norwegians to accept. norway ’ s own currency was an important symbol. the general aversion to government officials, who had proposed the union, also weighed heavily in the debate. and under the proposal, the currency itself would be changed. people were used to counting in speciedaler, divided into 120 skilling. although the decimal system of krone and øre was in fact far simpler, many people found it unnecessarily complicated. the proposal fell at the first vote in the storting. one norwegian who expressed pleasure at the apparent rescue of the speciedaler was cantor olafsen from romsdalen in the west of norway. he exclaimed : “ people here in the rural communities are shocked and astonished to hear that the norwegian people were within a hair ’ s breadth of losing their currency, after the enormous sacrifices they had made, and being given a new one instead with all the terrible disadvantages and problems that would inevitably have accompanied it … ” 3 the cantor ’ s joy was to be short - lived. norway joined the scandinavian monetary union only a year later. the speciedaler was abandoned and the krone took over. the advantages of being able to use norwegian money as legal tender in denmark and sweden trumped the symbolic value of the speciedaler. looking back, norway ’ s participation in a monetary union reflected a nation that had become self - assured and that viewed itself as its scandinavian relatives ’ equal. in the 1800s, norway ’ s economy and monetary system underwent extensive changes. increased trade and economic progress required a more advanced monetary system. a banking system developed, initially in the form of savings banks that extended credit based on their members ’ deposits, followed by the emergence of commercial banks. by the end of the 1800s, norges bank ’ s role had changed : from being norway ’ s only bank, it was now the bankers ’ bank. henrik wergeland ( 1834 ) : speech at eidsvoll, “ til forfædrenes mind