New regulation on monetary policy

The main changes are:

• The inflation target is set at 2 percent, compared with the previous target of 2.5 percent.
• Inflation targeting shall be forward-looking and flexible so that it can contribute to high and stable output and employment and to counteracting the build-up of financial imbalances.

Since 2001, monetary policy thinking and practice have evolved. The aim of the modernisation has been to capture this evolution and bring the regulation into line with the way monetary policy has been conducted in practise.

– The new regulation builds on the lessons learned since 2001, and lays a solid foundation for Norges Bank’s further implementation of monetary policy that enjoys the confidence of both the financial market and society as a whole, says Minister of Finance Siv Jensen (Progress Party).

When the inflation target was introduced in 2001, the Norwegian economy was facing a period where substantial oil revenues were to be phased into the economy. This was an important reason at the time for setting the inflation target higher than in other countries.

– The period of phasing in oil revenues is now largely behind us. There are no longer any compelling arguments for targeting a higher inflation rate than other countries. With an inflation target now lowered to 2 percent, Norway has the same inflation target as most comparable countries, says the Minister of Finance.

Read more:

• Further background for the modernisation of the regulation and the change in the regulation
  
• Letter from Ministry of Finance to Norges Bank 21.02.2018: Modernisation of the Monetary Policy Regulation
• Letter from Norges Bank to Ministry of Finance 28.02.2018: Modernisation of the Regulation on Monetary Policy