faster than norges bank presented as the most likely path at that time. in the interest of enhancing the transparency surrounding our conduct of monetary policy, we have published our own interest rate forecast over the past year and a half. according to the latest assessments of the executive board, the overall outlook suggests that it would be appropriate to raise the interest rate gradually to about 5 per cent in the course of this year and to a somewhat higher level in the period to summer 2008. at its meeting on 25 april, norges bank ’ s executive board decided to leave the key rate unchanged at 4. 00 per cent. the executive board considered the alternative of increasing the interest rate at that meeting. there is obviously considerable uncertainty surrounding the projections. the projections are based on our assessment of today ’ s economic situation, the outlook for developments in other countries, the functioning of the economy and the conditions necessary for reaching the inflation target. the chart shows that we must be prepared for developments in inflation and output that may differ from the central path. this may also imply that the interest rate may be lower or higher than our current projections. allow me to summarise : the fall in prices for imported goods and services and the increase in export prices have provided the norwegian economy with an appreciable income boost. the mainland economy has expanded rapidly in recent years. at the same time, inflation has remained low. increased efficiency and an ample supply of labour have made a contribution to these developments. there are now limited idle resources. monetary policy increasingly reflects that many norwegian enterprises are facing capacity constraints and that inflation will pick up. interest rates will continue to be raised gradually ahead so that we can assess the effects of interest rate changes and other new information about economic developments. thank you for the opportunity to present these assessments before answering questions.

household saving. the low level of saving also reflects a higher risk - willingness among households. household debt in norway is now almost twice as high as disposable income, and the debt to income ratio is higher than ever. the increase in household debt has occurred in tandem with a surge in house prices. non - residential property prices have also increased over the past years. there is now strong growth in credit to enterprises. at the same time, enterprises are rapidly building up their liquid assets. in the assessment of monetary policy, potential effects of asset prices, such as property prices and equity prices, but also of movements in the krone exchange rate, on the prospects for output, employment and inflation are taken into account. the krone exchange rate depreciated in the latter half of 2006, but has appreciated somewhat in 2007. under an inflation targeting regime, it is important to be mindful of the effects of higher interest rates on the krone exchange rate when inflation is low. interest rate developments in other countries are therefore of importance for interest rates in norway. early in this decade, inflation and economic growth were low in many countries. interest rates were cut. the rate cuts, in conjunction with strong growth in emerging economies, particularly in asia, led to cyclical turnaround. growth in the world economy is now the strongest witnessed in several decades. external interest rates have increased and are approaching a normal level. further interest rate hikes are expected in the euro area, sweden and the uk, while interest rates in the us may fall over the next year. in norway, the interest rate was reduced to a very low level in 2003 and 2004 when inflation fell and approached zero. there is a dynamic inherent in interest - rate setting. low interest rates stimulated demand and production and eventually led to prospects for higher inflation, to which we are reacting by raising interest rates. interest rate developments must be seen in the light of actual price developments and inflation, output and employment prospects. it normally takes some time for interest rates to have an impact on prices via changes in expectations, exchange rates or capacity utilisation. consequently, interest rate setting must be based on our expectations of developments ahead. the interest rate was raised in response to the strong increase in capacity utilisation and the associated inflation prospects. the interest rate has thus been increased well ahead of an actual rise in inflation. growth in capacity utilisation has been stronger than projected one year ago. the interest rate has thus been increased somewhat