A monetary policy stance that is aimed at stabilising inflation will thus also contribute to stabilising aggregate output and employment. The impact of monetary policy occurs with considerable and variable lags. Our analyses indicate that a substantial share of the effects of an interest rate change will occur within two years. Two years is thus a reasonable time horizon for achieving the inflation target. It is nevertheless conceivable that in a situation with a high rate of inflation and weak economic developments, Norges Bank may decide to apply a somewhat longer time horizon than two years to reach the target of 2½ per cent. Nor do we need to be in any hurry to raise the level of inflation in a situation where inflation is very low, while economic activity is high. By influencing inflation over time, monetary policy will not in itself cause unnecessary disturbances to the economy. A precondition for applying a longer time horizon is that financial market participants have strong confidence in low and stable inflation over time, and that wage formation has a nominal anchor. Frequent and marked interest rate changes can keep inflation under tight control, but will lead to wide variations in output and employment. This can be called a strict inflation target. Theoretically, we could also have chosen to stabilise output without taking into account variability in inflation. This can be called a strict output target. In Norway, as in a many other countries, we have chosen an intermediate solution.
The up-to-now data indicate that credit to the economy has increased by about 3-4 percentage points of GDP, giving clear signals for a promissory excitement of the economy financing in the future. Till August 2005, compared to last year’s end, the system assets increased further by 14.5 per cent, while there was augmentation of banking products as well as extension of their network. Compared to yearend of 2004, the banking system has attained an increasing profit level, at ALL 4.65 per cent. Return on equity (ROE) has resulted 24.8 per cent, while credit quality expressed as a ratio between (net) bad credit and total credit portfolio is only 2.39 per cent, from 4.2 per cent it was at the end of 2004. However, there is no room to be excited by figure euphoria, because credits are still new and their quality will have to carefully be examined. Another significant development of the banking system relates to the client’s service, which through the electronic terminals is being obviously accompanied by the increased number of electronic cards in circulation. Banks already provide debit and credit cards in cooperation with international companies such as Visa Card, MasterCard and Diners Club. Six banks provide the ATM service and ATMs  1/4  reached the number of 180 by the end of August 2005, while points of sale reached the number of 391. Of course, an important aspect remains also the further expansion and consolidation of the banking system.