, this has not led to a significant rise in inflation. challenges to monetary policy the government has defined an inflation target for monetary policy in norway. norges bank ’ s conduct of monetary policy shall be oriented towards low and stable inflation, with annual consumer price inflation of close to 2. 5 per cent over time. norges bank operates a flexible inflation targeting regime, so that weight is given to both variability in inflation and variability in output and employment. since summer 2003, the norwegian economy has experienced a marked upturn. while it took some time for employment to pick up, this is occurring now. employment is moving up and unemployment is falling rapidly. although inflation has increased somewhat, it is still low, even 2½ years after the cyclical change. the trend in prices for consumer goods over the past two or three years is a result of a favourable supply shock to the norwegian and global economies. low inflation is being accompanied by real income growth and a rise in production. since last summer, monetary policy in norway has been oriented towards a gradual increase in the interest rate – in small, not too frequent steps – towards a more normal level. on the basis of current information, this interest rate path provides a reasonable balance between the objectives to be given weight by norges bank in its conduct of monetary policy : • on the one hand, the objective of bringing inflation up to the target and anchoring inflation expectations suggests in isolation that interest rates should be kept at a low level until there are clear signs of higher inflation. • on the other hand, the norwegian economy is growing at a solid pace. capacity utilisation is slightly above the normal level and increasing, and house prices and household debt are rising sharply. in isolation this would call for a tightening of monetary policy. norges bank has decided to use some time to bring inflation back to target and has chosen to gradually shift to a less expansionary stance. the assessments of economic developments ahead will determine how gradual the interest rate increase will be. our current assessment implies an interest rate path where the interest rate is raised by about 1 percentage point this year. this is also in line with expectations in the money and foreign exchange markets. the interest rate was last raised in march. in line with the forecast in the march inflation report, there are prospects of another interest rate increase in the second quarter – at the monetary policy meeting in may or june – and a further increase thereafter. conclusion increased globalisation and the ensuing terms of trade improvements have exposed the

in circumstances and considerations is equally important and necessary. i have observed over the years that the implementation of islamic finance varies from one jurisdiction to another. rightly so, this reflects the different stages of development and diversity in local customs, market conventions and cultural norms. i believe through frequent and constructive dialogue, shariah boards and advisory authorities will become more appreciative of the many differences in business and economic environment – that lead to different shariah interpretations. concerted efforts to cultivate greater understanding of the variations in fiqh interpretations and approaches to islamic finance development are positive steps towards harmonisation that can deliver certainty of shariah implementation in the global islamic financial system. this roundtable meeting organised today is just a starting point of a long journey. it is my hope that this meeting offers a productive networking opportunity for all of us to identify common issues ; explore mutually beneficial opportunities ; and implement positive changes in our financial systems. it is not too far - fetched – to envisage the generation of breakthrough thinking for future research collaboration that is solution - driven ; practical ; and innovative in future meetings of this forum. ibnu taymiyyah once said : “ surely among the main thrusts in a religion is the union of hearts, the unison of views and easing of disputes conducted in good way. ” i implore all of us to begin today ’ s dialogue with an open mind and candid sharing of experiences that can benefit us all. it is through collaboration and cooperation that the intended values and impact of islamic finance can be realised for the betterment of the ummah. on that note, i wish you a productive and engaging discussion. 2 / 2 bis central bankers'speeches