The authorities in many countries implemented powerful fiscal policy measures to limit the economic impact of the outbreak. Central banks reduced policy rates and took substantial action to stabilise financial markets. Many central banks have stretched monetary policy further than we did and have implemented measures that were previously considered unconventional. The measures have included the provision of liquidity in the form of loans to the banking system and programmes involving government and corporate bond purchases. Policy rates among Norway’s trading partners are likely to be close to zero for some time ahead. The global activity level picked up sharply during summer 2020, before higher infection rates and stricter containment measures held back the recovery through autumn. Despite new waves of infection and lockdowns, overall activity has held up through autumn and winter. As a growing portion of the adult population is vaccinated, growth among Norway’s trading partners is expected to pick up. New, more contagious virus variants, vaccination problems and high infection rates in some emerging economies are still clouding the economic outlook. Substantial uncertainty and financial market volatility A weaker global economic outlook led to a marked fall in oil prices in spring 2020. Together with heightened uncertainty and financial market stress, this led to a sharp depreciation of the krone. The krone reached record-weak levels against a number of currencies in March. At the same time, we saw that the NOK market was functioning poorly. To better support market functioning, Norges Bank made extraordinary NOK purchases in the foreign exchange market.
In the first months of 2020, CPI inflation slowed substantially, reflecting a fall in electricity prices. The rise in the CPI adjusted for tax changes and excluding energy products (CPI-ATE) moved up through spring and summer and remained above the inflation target, primarily owing to higher imported goods inflation. Higher imported inflation reflects the krone depreciation in early 2020. Annual CPI inflation was 1.3 percent in 2020, while CPI-ATE inflation was 3 percent. Towards the end of 2020, higher electricity prices pushed up CPI inflation. In March 2021, the 12-month rise in the CPI was 3.1 percent, while underlying inflation was somewhat lower. Surveys indicate that inflation expectations are firmly anchored around the 2 percent inflation target. In the immediate aftermath of the Covid-19 outbreak in Norway, housing market turnover fell and house prices edged down. But through spring 2020, housing market activity picked up and prices rose. In April 2021, house prices were more than 12 percent higher than at the same time in 2020. Growth in household credit increased slightly through 2020, but is still lower than in the 2/4  BIS central bankers' speeches  years prior to the pandemic. Economic policy Let me now say a few words about the economic policy conducted since Covid-19 hit Norway. Fiscal policy has taken the lead and played a decisive role in limiting the adverse economic impact of the pandemic and the measures to contain it.