Monetary Policy in an Open Economy

The projections in the Inflation Report are based on the technical assumption that the krone exchange rate will remain stable.. Exchange rates between the major currencies

The fixed exchange rate regime, which was introduced in 1986, reinstated monetary policy as an instrument of economic policy in Norway and laid the foundation for lower inflation

Monetary policy easing has been aimed at bringing inflation up towards the target of 2.5 per cent and stabilising developments in output and employment... The decline in interest

In recognition of this fact, Norges Bank gradually gave greater weight to influencing inflation developments as a prerequisite for a more stable krone exchange rate over time..

Well anchored inflation expectations made monetary policy effective – the reduction in Norges Bank’s key policy rate was perceived as a decline in the real interest rate.. Other

In a small open economy like Norway, monetary policy operates primarily through five channels: 18 (1) the direct exchange rate channel to inflation, (2) the real interest

Developments over recent years show that monetary policy is effective and that inflation can be kept at a low and stable rate, even when growth in labour costs is high.. However, if

the key policy rate is set with a view to achieving low and stable inflation without causing excessive fluctuations in output and employment. the key policy rate forecast is