6  See for example Financial Times (Ralph Atkins), 2 March 2007, p.11: “Central bankers eye Norway’s clarity on rates” and Michael Woodford (2007): “The Case for Forecast Targeting as a Monetary Policy Strategy”, in Journal of Economic Perspectives, 21, no. 4, pp. 3-24. 7  In 1959, Petter Jacob Bjerve, then director general of Statistics Norway, wrote that “Apparently, the question of whether national budgets should be published involved an optimum problem: considering both advantages and disadvantages of publishing, any cabinet will probably decide what to publish so as to achieve best possible results of its policy, according to the social preferences of the cabinet.” See Petter Jacob Bjerve (1959): Planning in Norway 1947-1956, North-Holland Publishing Company, p. 352. 2  BIS Review 140/2009  Hermod Skånland proposed the establishment of an incomes-policy council that was to decide the limits for wage growth in Norway. 8 But the proposal was not in tune with the new views which were already taking root in society. The council was never established. Domestic and international developments in the 1970s weakened the conviction that the economy could be fine-tuned. While market failure was the main concern earlier, focus now shifted to regulatory failure. The political pendulum swung away from government control and towards market liberalisation. 9 When decisionmaking was to be decentralised, it was important that the decision-makers acted in line with the overriding policy objectives. New transparency and disclosure requirements were designed to this end.
In the interview Skogstad Aamo flatly denied rumours of a krone devaluation. But before the interview was printed, the news agency NTB reported that the krone had been devalued by 12 per cent. 16 Perhaps the journalist was disappointed but Skogstad Aamo was not criticised for breaking the eighth commandment. Over the last decade, the objective of monetary policy has not been a fixed krone exchange rate, but price stability through low and stable inflation. 17 According to the monetary policy regulation the objective is inflation of close to 2.5 per cent over time. But how long is over time? And what is close to 2.5 per cent? With these formulations, it is no longer that easy to evaluate monetary policy. There are several reasons for this. First, it takes up to one to two years for a change in the interest rate to feed through to inflation. Second, inflation is not only influenced by the interest rate. For example, precipitation levels can have a strong impact on electricity prices. Third, we set interest rates also with the aim of promoting stability in output and employment. If the economy is exposed to severe shocks, we may at times seek to bring inflation rapidly back to target, while under other conditions we deliberately choose a longer horizon. An evaluation of monetary policy cannot therefore be based on the latest figures for inflation.