Norges Bank Watch 2004

Abstract

The main task of the committee has been to evaluate how well Norges Bank has fulfilled its monetary policy mandate given by the Norwegian Government on 29 March 2001. In particular, the committee has reviewed Norges Bank’s interpretation of the mandate and finds that its interpretation is insufficiently flexible. In addition, the committee has assessed Norges Bank’s monetary policy strategy and decision making process and considers them suboptimal and inefficient. Furthermore, the committee has evaluated Norges Bank’s forecasts and interest rate decisions in 2003 and has detected persistent forecast errors as well as policy mistakes that kept monetary policy too tight at the end of 2002 and early in 2003 and perhaps too loose at the end of 2003. The committee has also assessed Norges Bank’s use of indicators for underlying inflation and the output gap, and concludes that its measures are poor and need improvement. Finally, the committee has evaluated Norges Bank’s public communication and transparency and finds that despite increased public communication, there is still a notable lack of transparency.