The topic I am going to discuss here is how to treat the exchange rate assumption when making projections under an inflation targeting regime. The central bank of Norway made the official change to inflation targeting in March 2001, and my talk is based on our experience since then.

[...] Norges Bank's macro models have played a key role in forecasting work over many years. Inflation targeting probably places greater demands on our understanding of the way the economy functions than earlier regimes, such as (strict) exchange rate targeting. Developments in economics and...

When professor Lars E. O. Svensson (Princeton University) visited Norges Bank's conference on monetary policy in 2004, he suggested we should "find an instrument-rate path such that projections of inflation and output gap 'look good'." We took on the challenge of how to translate the theoretical...

The transition to inflation targeting, which took place in Norway in 2001, may perhaps at the time have appeared to be a transition to a new and unfamiliar monetary policy system. Inflation targeting has, after just a few years, resulted in changes in the way central banks work and not least in...

The interest rate forecast plays a key role in the communication of monetary policy in Norges Bank. We give a comprehensive overview of the Bank's communication with focus on the interest rate forecast. The main arguments for publishing the interest rate forecast are discussed. The arguments are...

Det finnes bare en sentralbank i et land. Det er derfor naturlig å sammenligne den med sentralbanker i andre land. Det er bred enighet om målet for pengepolitikken - prisstabilitet - og at sentralbanken skal være uavhengig i bruken av virkemidlene for å nå målet. Internasjonal...

A country has only one central bank. It is therefore logical to compare it with central banks of other countries. There is broad agreement on the objective of monetary policy - price stability - and on central bank independence in the use of policy instruments to reach that objective. According...