the coming years. unemployment is set to edge up to around pre - pandemic levels. 2 / 3 bis - central bankers'speeches wage growth is expected to slow from next year. but given a slower rise in prices, wages are expected to rise faster than prices in the years ahead. there is uncertainty about future developments in the norwegian economy. if business costs continue to accelerate rapidly or the krone turns out to be weaker than projected, price inflation may remain higher for longer than currently projected. in that case, the committee is prepared to raise the policy rate again. if there is a more pronounced slowdown in the norwegian economy or inflation declines more rapidly, the policy rate may be lowered earlier than currently envisaged. 3 / 3 bis - central bankers'speeches

jarle bergo : monetary policy and its role in economic policy address by mr jarle bergo, deputy governor of norges bank ( central bank of norway ), at the confederation of vocational unions, oslo, 7 february 2003. the address is based on the assessments presented at norges bank ’ s press conference following the executive board ’ s monetary policy meeting on 22 january and on previous speeches. please note that the text below may differ slightly from the actual presentation. * * * the objective of monetary policy is to ensure nominal stability. there were wide fluctuations in the norwegian economy in the 1970s and 1980s. economic developments were marked by high and variable inflation. inflation accelerated in the beginning of the 1980s and it took a long time before it fell. the absence of a nominal anchor was one of the main reasons behind these pronounced swings in the norwegian economy. with a policy of low interest rates and devaluations, inflation took root. nominal interest rates were kept at a low level even though inflation and the value of tax - deductible interest expenditure rose. frequent devaluations from 1976 were not able to prevent a decline in the manufacturing sector. on the contrary, they proved to be self - reinforcing. the wide fluctuations culminated in a credit boom in the mid - 1980s, followed by a deep recession and high unemployment towards the end of the 1980s. from the mid - 1980s, during and after the credit bubble, it was recognised that a substantial revision of economic policy would be necessary and that the problems created by inflation had to be taken seriously. the exchange rate was chosen as the nominal anchor. deteriorating competitiveness due to high wage growth would no longer be remedied by means of devaluations. instead, imbalances in the labour market would be addressed by means of a counter - cyclical policy. substantial emphasis was placed on the importance of wage formation for developments in employment. only when wage growth dropped below the level of our trading partners did unemployment begin to fall and the manufacturing sector began to pick up. thus, the fixed exchange rate policy was not introduced in order to strengthen the internationally exposed business sector. on the contrary, it was a breach in the approach whereby monetary policy and “ exchange rate policy ” had been oriented towards safeguarding these sectors. the fixed exchange rate was an intermediate target for achieving low and stable inflation. the exchange rate remained stable up to the autumn of 1986, partly because wage growth was low and aggregate demand did not fuel pressures