In this framework, pricing goods and services produced by the public sector rationally and enhancing the quality of fiscal discipline is crucial in terms of the predictability of inflation. Another channel, which affects inflation and inflation expectations, is the incomes policy of the public sector. One of the main determinants of expectations for price and wage inflation in Turkey is the increase in wages made by the public sector to its own employees. Wage increases in the public sector may set a precedent for the private sector. In this context, the consistent trend of the incomes policy with the inflation target is significant in terms of achieving the inflation-targets more easily and quickly. One of the main components of total demand is the public sector’s direct purchase of goods and services. Therefore, while evaluating developments regarding the inflation outlook, the Central Bank carefully monitors public expenditures as well. The Central Bank takes into consideration the budget projections while setting the inflation targets and the monetary policy perspective and hence, makes various assumptions regarding the channels mentioned above. In case of an unpredicted development in one of the channels, the policy stance needs to be updated. Monetary Policy Committee meetings and the decision-making process The Monetary Policy Committee will continue to meet once a month in the upcoming period as it has done since 2001 and as stipulated by Central Bank Law. The meeting will continue to be held in two sessions.
Svein Gjedrem: The economic outlook and monetary policy Speech by Mr Svein Gjedrem, Governor of Norges Bank (Central Bank of Norway), at SR-banken, Stavanger, 18 March 2005. The speech is based on the assessments presented at Norges Bank’s press conference following the Executive Board’s monetary policy meeting on 16 March, Inflation Report 1/05 and on previous speeches. The text below may differ slightly from the actual presentation. The  Charts in pdf-format can be found on the Norges Bank’s website. *  *  *  The Norwegian economy is growing at a solid pace, and there are prospects that growth will remain high in the year ahead. The recession was mild after the preceding expansion culminated two and a half years ago. The higher rate of cost inflation in Norway relative to other countries was broken without production being impacted to the same extent as during the recessions in the early 1980s and around 1990. One of the main reasons for this is probably that low inflation in the 1990s and the current monetary policy have anchored expectations of low and stable inflation among economic agents. The need to bring down inflation was the main reason why New Zealand, the first country to do so, introduced an inflation target for monetary policy at the end of the 1980s. Canada, the UK, Sweden and Australia followed suit later in the 1990s. Inflation targeting has gradually become the normal monetary policy system in developed economies. In Norway, the Government introduced an inflation target in 2001.