Capital adequacy indicators in Romania and the EU (average) 20  Figure 10. Stress test results for credit institutions (September 2017)  percent  10  19  percent  0  18 -10 17 -20  16 15  -30  14 -40  total capital ratio Tier 1 capital ratio total capital ratio – EU average Tier 1 capital ratio – EU average Source: NBR, EBA  -50 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28  Sep. 17  Jun. 17  Mar. 17  Dec. 16  Sep. 16  Jun. 16  Mar. 16  Dec. 15  Sep. 15  Jun. 15  Mar. 15  Dec. 14  13  potential impact on own funds median value of impact impact at system level Source: NBR 8  Figure 11. Value of LCR* (September 2017) percent  percent  Figure 12.
Economic agents therefore need to understand the central bank’s intentions in its interest-rate setting. Otherwise, agents might perceive future interest rate developments as unnecessarily uncertain. Decisions on consumption and investment will then be more difficult to make. This might lead to greater instability both in terms of variables in the real economy and in inflation. As I mentioned earlier, Norges Bank only influences the shortest money market rates. Open communication concerning our future response pattern will probably also allow us to have more influence over somewhat longer-term interest rates and thereby conduct a more effective monetary policy. Many agents outside the Bank place considerable emphasis on Norges Bank’s projections when they make their decisions. The projections are also evaluated by agents outside the Bank and by Norges Bank itself. The interpretation and evaluation of these projections will be more difficult if they are based on an interest rate assumption that is not consistent with the rate Norges Bank considers most realistic. If the forecasts for inflation and output are to reflect the Bank’s best estimates, the underlying interest rate assumption must be a rate the Bank believes to be realistic. 2  Arguments in favour of the publication of an interest rate forecast by the central bank are discussed in more detail in some of the papers presented at the conference hosted by Sveriges Riksbank entitled: “Inflation Targeting: implementation, communication and effectiveness”: http://www.riksbank.com/templates/Page.aspx?id=15814.