The progress we have made in research and practical policy implementation still holds good, and we will continue to conduct a policy of flexible inflation targeting. But it is clear that we need to find a better means of integrating the financial sector and what is happening there into our analyses. Both researchers and policymakers have a lot to think about in the coming period, and there is no doubt that the coming years will be interesting ones. BIS Review 164/2010  9
The arrangement provides banks with Treasury bills. Banks have used these as collateral for loans, sold them or kept them as liquidity reserves. Norges Bank has also expanded its use of its ordinary instruments. We have supplied additional liquidity through our loan facilities and made arrangements for banks to furnish a greater range of securities as collateral for the loans. We have also provided loans with longer-than-usual maturities. The longest maturities have been two- and three-year loans, which have been geared to small banks. Norges Bank has also supplied NOK through currency swaps and offered US dollar loans to Norwegian banks. Norges Bank entered into a swap agreement with the Federal Reserve, authorising a loan of up to USD 15 billion. The measures have been effective. Money market rates, which for a period were above 8 per cent, are now approximately 3 per cent. In this period Norges Bank reduced the key policy rate by 3.75 percentage points to 2 per cent on 25 March. Banks’ lending rates have decreased considerably. Credit flows have improved, but access to credit is still difficult for enterprises. Money market premiums have fallen. In the first quarter of 2009, premiums on three-month interest rates in Norway stood at 1.2 percentage points. Norwegian money market premiums are expected to edge down ahead in line with premiums in global markets. The global downturn led to a marked fall in prices for oil and other commodities through autumn 2008. Oil prices have for a period hovered around USD 40-50 per barrel.