In periods, inflation will deviate from the target while output will also deviate from potential output. A successful monetary policy provides the economy with a nominal anchor and contributes to stabilising the economy. This reduces the uncertainty associated with future inflation. Conclusion Assessing uncertainty is an important part of the central bank’s communication strategy. An explicit forecast for inflation, output and the interest rate, in addition to assessing uncertainty in the forecasts, is intended to enable economic agents to better understand the central bank’s intentions in its interestrate setting. When the economy is exposed to disturbances, agents will have a basis for predicting the central bank’s interest rate response and helping to ensure that market interest rates move in the right direction, thereby increasing the effectiveness of monetary policy. Norges Bank has in recent years taken a number of steps towards greater transparency in monetary policy. The strategy intervals are published at the beginning of the period to which they apply. Each monetary policy meeting is followed by a broad review of the most important factors underlying the interest rate decision. The use of the Bank’s own forecasts for the interest rate path in the Inflation Report can be viewed as a further step towards increased transparency with regard to the basis for monetary policy. Thank you for your attention. BIS Review 6/2006  7
Evidently the supervisor’s aim must be to ensure that the banking sector is a fortress against the storm and not an added problem that we have to face at the worst time imaginable. 1  Recently, it has been frequently said that the banking sector is in much better shape than it was before the previous crisis. This will allow it to become part of the solution. In any event, crises are, by definition, periods of transition and COVID-19, despite its specific features, will be no exception. I believe this crisis will serve as a catalyst which will speed up many of the trends that we have already seen and discussed on many occasions at our meetings. First, as regards the importance of digitalisation. Second, in respect of the need to gain in efficiency and cut costs. Also, naturally, as regards the criticality of good governance and risk control, underpinned by the best international practices which will allow institutions to react appropriately to such changing circumstances. And, above all, regarding having a sound and sustainable business model for the medium and long term. We do not know what the future holds for us, but what we do know is that the better prepared we are, the better we will fare. Before I conclude, let me apologise for not having made the most of this address to introduce a supervisory “wedge”.