2  BIS central bankers’ speeches  If monetary policy only took into account the low level of inflation, the key policy rate would be rapidly reduced and kept close to zero for a good while. Inflation might then pick up faster, partly as a result of a weaker krone. In the light of the trade-off against other considerations, however, the Bank does not want to accelerate the pace of inflation. The result would be a pronounced impact on output and employment and increase the risk of a build-up of financial imbalances. When weight is also given to robustness and to stabilising developments in the real economy, the interest rate path will be higher. As a result of ample cross-border labour flows, changes in competitive conditions and new trade patterns, consumer price inflation has now been below 2.5 percent for a period. Prices for domestically produced goods have risen considerably more than consumer prices, reflecting the improvement in Norway’s terms of trade. Incomes, output and employment are growing at a solid pace and capacity utilisation is estimated to be above a normal level. Household debt and house prices have increased more than incomes. In today’s situation, it is appropriate to use a few years to bring up inflation. The interest rate has therefore not been reduced further. A higher key policy rate could have curbed debt growth and demand pressures in the Norwegian economy.
Kevin Stiroh: A perspective on supervisory objectives and tradeoffs Keynote remarks by Mr Kevin Stiroh, Executive Vice President of the Financial Institution Supervision Group of the Federal Reserve Bank of New York, at the Columbia University’s School of International and Public Affairs and the Clearing House Association Conference on “Optimal Bank Capital Regulation,” Columbia University, New York City, 23 February 2017. * * * Accompanying charts  Introduction Good afternoon. Thank you very much for the kind introduction. Since the financial crisis, the topic of today’s conference—Optimal Bank Capital Regulation— has been of considerable interest to academics, the official sector, and market participants. Some have argued for dramatically higher capital requirements, while others have argued with equal conviction for substantially lower capital requirements. I am happy to be here today to offer some thoughts about potential trade-offs across supervisory tools and objectives, and how one might consider those trade-offs within the current supervisory framework. I conclude that the U.S. banking system has become considerably more resilient since the financial crisis, which is a necessary condition for the sustainable provision of financial services to households and businesses that supports the growth and stability of the U.S. economy. My comments today are my own and do not necessarily represent those of the Federal Reserve Bank of New York or the Federal Reserve System. Supervisory Objectives and Trade-Offs A well-functioning financial system intermediates between savers and borrowers, supports a robust payments system, and facilitates risk transfer and the efficient allocation of capital.