unemployment is low. at the same time, there are signs that the labour market is less tight than earlier. employment growth has declined, and unemployment increased a little through last year. unemployment has evolved as we projected in december, while employment appears to be slightly higher than projected. chart : inflation broadly in line with projections price inflation has declined since last summer but remains markedly above the inflation target. energy prices increased through autumn so that overall consumer price inflation has moved back up somewhat. excluding energy prices and indirect tax changes, inflation moved down to 5. 5 percent in december broadly as projected, with a fall in both imported goods inflation and the rate of increase in domestic goods and services prices. chart : policy rate will likely remain at the current level for some time the committee assesses that the policy rate is now sufficiently high to return inflation to target within a reasonable time horizon. monetary policy is having a tightening effect, and the economy is cooling down. it will take time before we see the full effects of the past rate hikes. at the same time, business costs have risen considerably in recent years. continued high wage growth and the krone depreciation through last year will likely restrain disinflation. we therefore believe a continued tight monetary policy stance will be needed for some time ahead. further out, when inflation comes down and economic conditions so warrant, the committee can start lowering the policy rate. there is uncertainty about future developments in the norwegian economy. if input cost inflation remains elevated or the krone depreciates again, price inflation may remain high longer than 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 envisaged in december. 2 / 2 bis - central bankers'speeches

economy meetings that are held every two months in basel and where central bank governors from systemic economies have the occasion to discuss issues the global economic outlook, international monetary and financial issues and other issues of mutual interest. clearly, these fora have turned out to be very useful in times of global financial distress and we should continue to invest on them in the future. i would also like to mention that the bis as an institution has been “ ahead of the curve ” in terms of identifying unsustainable trends in the financial sector and more generally in the global economy – such as the under - appreciation of risk and excessive credit growth – which eventually led to the global financial crisis. it could do so based on a high degree of analytical depth and information sharing at a global level that the bis and the basel committees have been able to develop over time. these analytical contributions have played a non - negligible contribution to form the strong and coordinated policy response that we have witnessed during the financial crisis. see baldwin ( 2010 ), in particular chapter 5 by s. j. evenett. model - based simulations ( bussiere et al. 2010 ) suggest that the impairment of the global flow of trade would hamper the recovery from the crisis, as well as the long - term growth potential of the global economy. at the same time, it is unlikely that protectionism would help to correct existing current account imbalances. moreover, the countries implementing protectionist measures should expect a deterioration of their international competitiveness, which would further affect the potential for longer - term real gdp growth. see cgfs ( 2010 ). 2. 3 where the system has fared less well : regulatory arbitrage and global imbalances as much as global governance appears to have passed the severe test of the global financial crisis, we should not remain oblivious to the fact that there were significant shortcomings that may have contributed to create the conditions for the crisis to happen in the first place. i will mention, in particular, two dimensions : the insufficiencies in terms of financial regulation and international coordination, on the one hand, as well as the constellation of global imbalances, on the other. let me deal with both in turn. the lack of integration and coordination in financial regulation was pervasive before the crisis, even though this was not properly appreciated at the time, and has encouraged financial institutions to engage in a large degree of regulatory arbitrage. 10 this was the unavoida