inflation. therefore, the interest rate is low. monetary policy influences the economy with long and variable lags. norges bank sets the interest rate with a view to stabilising inflation at the target within a reasonable time horizon, normally 1 - 3 years. the more precise horizon will depend on disturbances to which the economy is exposed and how they will affect the path for inflation and the real economy ahead. the economy grows over time. output will in some periods lie above and in others below the long - term trend. 2 stabilising output means seeking to maintain actual output near trend. there is one main monetary policy instrument : the interest rate. the interest rate is set with a view to achieving low and stable inflation, while at the same time seeking to avoid substantial variations in output and employment. in recent years, household income has shown solid growth, and household confidence has been high. high growth in labour costs over a number of years, the cyclical downturn in the world economy and a strong krone in periods resulted in deteriorating profitability in many companies. employment and berg, clas and lars jonung ( 1998 ) : “ pioneering price level targeting : the swedish experience 1931 - 37 ”, conference on monetary policy rules, stockholm, 12 - 13 june 1998. trend growth has been used as a rough estimate of potential output. potential output is the level of output that is consistent with stable inflation over time. investment fell. the level of household borrowing is high, while enterprises have reduced debt. high debt growth increases the vulnerability of households to economic disturbances. wage growth has slowed now and the krone has depreciated. a turnaround is taking place in corporate earnings and there are also signs of this in investment and credit demand. the interest rate can be used to reduce credit demand. at present - with low interest rates abroad and a close relationship between domestic interest rates and the krone - a tighter monetary policy would curb credit demand primarily because a stronger krone would reduce job security. a flexible inflation targeting regime reduces the possibility of exposing households to a dual shock in the form of higher unemployment and higher interest rates, as was the case at the beginning of the 1990s. if the economy is exposed to disturbances that can lead to higher unemployment, inflation will normally decline and interest rates will be lowered. a flexible exchange rate an important channel for monetary policy in a small, open economy is the foreign exchange market and the exchange rate. the krone fluctuates. this is

that provided much of the impetus for the growth in gross domestic product ( gdp ). while consumption expenditure and exports of goods and services kept pace with gdp, the growth rate of investment exceeded that of the gdp by nearly 60 %. over the same period, private building activity ( which includes projects like this one ) grew by 21 % more than gdp. it is projects like this one that would have facilitated the strong performance of the economy in recent years. indeed, the construction sector is still the main driver of the economy, and expanded by 7 % in 2006 and by 5. 4 % in the first quarter of 2007. as is the case in barbados, the buoyancy of the construction sector generated certain spin - offs in other areas. this initiative to rationalise your bank ’ s operational and technical capacity is undoubtedly good for the organisation. it is widely accepted that one good measure of the development of an economy is the level of financial sophistication. as customers ’ income levels rise and they are exposed through the electronic media and travel to more up - market financial services, they will demand a wider range of products and better levels of service delivery. but given the degree to which these modern products depend on accounting, internal control, technology and other services, their provision can be only as efficient as the back - office operations which support them. accordingly, a service - oriented bank must be constantly upgrading these back - office capabilities if it is to meet the public ’ s demand for sophisticated products and services. a financial institution can make its reputation on its ability to deliver those services which are in the full glare of the public, but if the same institution does not allocate adequate resources to its back - office activities it will not keep that reputation for very long. take technology as a case in point. modern commercial banks now use technology to improve the efficiency of distributional channels, utilise outsourcing and improve real - time transactions. as the old adage states, time is money. since the overwhelming majority of banking transactions are time - sensitive, the efficient use of time should be the goal of both the bank and the customer. it is the state of the institution ’ s technology which ultimately affects the bank ’ s ability to make electronic transfers in a timely fashion. i would like to believe that customers can expect to have their accounts credited and debited more speedily as a result of this initiative and that the result will be a more satisfied customer. i am sure that firstcar