Norges Bank sent a letter to Norway’s Ministry of Finance with an attached report responding to the ministry’s request for input to its evaluation of the monetary policy provision. The bank concludes that experience with flexible inflation targeting has been good and that its review of international experience, including supply-side disturbances, and recent monetary policy research does not give clear recommendations to change the current mandate. The report reiterates low and stable inflation as the overarching objective, operationalised through a quantified target for Consumer Price Index (CPI) inflation, alongside considerations of high and stable output and employment and countering the build-up of financial imbalances. It argues that CPI works well as the target variable and that a forward-looking, flexible approach can look through short-lived price movements, but warns that supply shocks cannot automatically be ignored unless inflation expectations are well anchored and the effects are expected to be temporary. It also notes that recent framework reviews by inflation-targeting central banks have generally not reconsidered the inflation target level, and Norges Bank sees no compelling reasons for Norway to have a different inflation target from its trading partners. The submission is intended to inform the Ministry of Finance’s ongoing evaluation of the monetary policy provision.
Norges Bank 2026-03-27
Norges Bank tells Norway’s Ministry of Finance it finds no clear case for changing the monetary policy mandate
Norges Bank submitted a report to Norway’s Ministry of Finance, affirming the effectiveness of flexible inflation targeting and recommending no changes to the current monetary policy mandate. The report emphasizes maintaining low and stable inflation through a Consumer Price Index target while considering output, employment, and financial imbalances. It advises a forward-looking approach to temporary supply shocks, noting alignment with international practices.