zealand's assessment that interventions would hardly have made a significant contribution to increasing stability in new zealand's economy in recent years. internationally, a number of empirical studies have been conducted on the effectiveness of exchange market interventions. the studies of interventions in the 1990s find that they were more effective than studies conducted in the 1980s. this may be due to shifts in monetary policy regimes and greater emphasis on transparency. it is probably easier to win credibility when market participants know that interventions are anchored in stabilisation policy considerations rather than a short - term exchange rate objective. however, this presupposes market confidence in the ability of economic policy in general and monetary policy in particular to deliver nominal stability. it is first and foremost the signal effects of interventions that have been found to be effective and particularly when interventions are made publicly known and justified by the central bank. lars e. o. svensson. ” independent review of the operation of monetary policy : report to the minister of finance ”, february 2001. l. sarno and m. p. taylor. ” official intervention in the foreign exchange market : is it effective, and if so, how does it work ”, discussion paper no. 2690, february 2001, center for economic policy research. for norges bank, it may be appropriate in special situations to intervene to a limited extent to stabilise inflation, should the krone move to a level that we do not consider reasonable on the basis of fundamentals, and if this could contribute to stabilising inflation. however, norges bank will not act in a way that prompts unilateral bets against the krone. as a main rule, the bank is likely to consider intervening only when we see a clear profit opportunity for the central bank. this may also be appropriate in the event of extensive short - term fluctuations in thin markets. in such situations, the risk of a loss - making game against foreign exchange operators will be limited. any interventions and the background for them will be clearly communicated to market participants. evaluation and predictability today's inflation rate is partly the result of the interest rate that was set one to two years ago. current inflation figures do not provide an adequate basis for determining the level at which interest rates should be set today. monthly figures for the consumer price index are also influenced by random and temporary factors that have little impact on inflation over time. precipitation levels influence electricity prices. changes in indirect taxes have an immediate impact on the consumer price index. the

. while the overall global situation suggests that consumer price inflation may be somewhat lower than anticipated in the period ahead, the domestic economic situation points in the opposite direction. growth in domestic labour costs may turn out to be higher than estimated. according to an overall assessment of the inflation outlook, our conclusion at the executive board meeting on 8 august was that with an unchanged interest rate ahead the probability that inflation two years ahead will be higher than 2½ per cent is the same as the probability that it will be lower. thank you for you attention.