Unemployment has remained low, and the employment rate has increased to the highest level seen in over 10 years. In recent months, economic growth has slowed. The labour market is still tight, but labour shortages have eased. Recently, unemployment has risen slightly. House prices fell in autumn 2022 but have since edged up again. Chart 5: In 2022 wage growth reached its highest level since 2011 In 2022 wage growth reached its highest level since 2011 and is expected to rise further this year. Higher wage growth means higher business costs, and high economic activity may make it easier for businesses to pass on higher costs to their selling prices. Overall mainland business profitability is solid, even though there are wide differences across industries. The Norwegian wage formation model is characterised by a high degree of coordination, and the social partners take into consideration employment and firms'  2/5  BIS - Central bankers' speeches  profitability when negotiating wages. Experience has shown that wage growth adjusts faster in Norway than in other countries when the economy turns. This reduces the risk of wage price spirals, which thereby lessens the need for monetary policy tightening in response to a cost shock than would otherwise have been the case. After the pandemic, Norges Bank was one of the first central banks to raise its policy rate in autumn 2021. But policy rates were then raised substantially in many countries through 2022 in response to the surge in inflation.
Economic policy cannot shield the economy totally from shocks that may arise, but can dampen their impact. A framework that provides monetary policy predictability makes it easier to succeed. Thank you for your attention. 5/5  BIS - Central bankers' speeches