7 per cent, while the forecast for 2012 has been reduced from 3. 9 per cent to 3. 6 per cent. the risks to this outlook are seen to be on the downside, mainly on account of risk to the global economy. the bank ’ s inflation forecast has been adjusted higher on a few occasions this year to take into account higher oil and food prices. at the last sitting of the mpc in september, the inflation forecast was left largely unchanged. it is expected that inflation could breach the upper end of the target range in the final quarter of 2011 and to peak in the first quarter of 2012 at around 6. 2 per cent, but then to return within the target range in the second quarter. in the final quarter of 2012, inflation is expected to ease to around 5. 5 per cent. the bank ’ s measure of core inflation shows a rising trend, peaking at around 5. 1 per cent in the second and third quarters of 2013. what is important for the bank is the trajectory of inflation and to what extent any breach of the target is sustained. our assumptions at this stage point to a temporary breach of the inflation target. however, there are a number of upside risks to the inflation outlook which require careful monitoring. the main upside risks continue to emanate from exogenous factors, as well as administered prices, and despite the easing in wage pressures this year, this could become a factor going forward. the stronger currency to some extent helped to contain inflationary pressures domestically, but more recently, the depreciation of the rand brought to the fore the potential upside risk emanating from a sharply weaker currency. to what extent one should be concerned about the recent depreciation in the rand exchange rate is a function of many factors, including whether it is short - term or longer - term in nature, the eventual magnitude of the depreciation, the pricing power of firms, the stickiness of prices, the history of inflation and the domestic content of traded goods. clearly, the mpc is having to deal with a delicate balance at present between the upside risks to inflation and the downside risks to growth. much is dependent on the unfolding global environment, in particular growth prospects in the us, and the sovereign debt crisis in the euro zone, whether or not this turns into a banking crisis and spills over to other areas of the world. should european leaders manage to avert a full - blown crisis, this will go a long way to

øystein olsen : the role of central banks – a norwegian perspective speech by mr øystein olsen, governor of norges bank ( central bank of norway ), at the official monetary and financial institutions forum ( omfif ), london, 1 november 2016. * * * the charts can be found at the central bank of norway ’ s website. introduction let me begin by thanking the omfif for the opportunity to speak to you today about the monetary policy regime in norway. like other central banks, the central bank of norway is facing new challenges in a post - crisis environment of persistently low interest rates and uncertainty. today i want to focus on how norges bank is responding to those challenges. inflation targeting was formally introduced as a framework for monetary policy in norway 15 years ago. as in other inflation - targeting countries, our inflation targeting regime has become more flexible over time. the operational target of monetary policy in norway is annual consumer price inflation of close to 2. 5 % over time. however, according to the mandate, interest rate setting should seek to achieve a reasonable balance between inflation and capacity utilisation. monetary policy should also be robust, taking uncertainty into account and seeking to avoid adverse outcomes. i will reurn to this topic in the following. the reasoning behind the policy rate decision taken by norges bank ’ s executive board is published in our monetary policy report. the evolution of inflation targeting in norway reflects the practical experience we have gained since it was introduced. the trade - offs have been challenging at times. in these past 15 years, the norwegian economy has been exposed to different types of shocks. the supply side has been influenced by increased labour immigration following eu enlargement in 2004. the legacies from the financial crisis have posed challenges that monetary policy has had to address. and not least, the norwegian economy has had to contend with wide fluctuations in the terms of trade. chart : performance inflation targeting has performed well over the past 15 years taken as a whole. when inflation targeting was introduced, inflation had already come down after years at an elevated level and has since been low and relatively stable. at the same time, monetary policy has helped to moderate fluctuations in the real economy. flexible inflation targeting has functioned well. the monetary policy framework has provided sufficient flexibility to address the shocks that have hit the economy. long - term interest rates have fallen chart : international interest rates in recent years, monetary policy has faced a new challenge in many countries. the interest rate level