Norway tried for many years to make exchange rate targeting work, while also undertaking significant financial liberalisation, but its 1993-4 banking crisis pushed it towards a greater focus on price stability and more exchange rate flexibility, and it eventually adopted inflation targeting in 2001.
| Years | Targets and attainment | Classification |
| 1974-87 | currency associated with Snake to end-1978, with devaluations 1976, 1977 and 1978; then pegged to wider basket; basket changed 1982 and 1984, devaluations 1982, 1984, 1986; monetary policy initially operates mainly through direct and indirect effects on bank lending, but is complicated by monetary financing of budget deficits; bank lending control ended 1984 within wider process of financial liberalisation | loose exchange rate targeting LERT |
| 1988-92 | 1988 change to more active forex intervention policy; tighter peg to basket, then from late 1990 to ecu, but peg abandoned end-1992; monetary policy operated mainly through interest rates | full exchange rate targeting FERT |
| 1993-2000 | banking crisis 1993-94; initial emphasis on exchange rate stability (in form of ‘implicit’ exchange rate band targeted mainly via interest rates), with medium-term objective of formally repegging; this gradually gives way to increased emphasis on price stability and greater exchange rate flexibility | loosely structured discretion LSD |
| 2001-23 | inflation target met on annual averages 18 years and near-met 2 years out of 23 (though headline CPI varies quite widely); 2004 undershoot not accompanied by sharp fall in inflation expectations; some refinements to IT procedures (increases in transparency) in early years; macroprudential policies from 2013; 2018 monetary policy objectives recast as inflation target (reduced from 2.5% to 2%) plus contribution to high and stable output and employment and counteraction of build-up of financial imbalances; strong fiscal and monetary response to Covid-19; inflation rises above target from late 2021, short-term inflation expectations also rise, but longer-term expectations remain less than 1 percentage point above the 2% point target | full inflation targeting FIT |
Selected IMF references: RED 1977 pp22-4; RED 1980 pp42-3; RED 1983 pp42-3, 63; RED 1984 pp45-8, 69-70; SR 1984 pp9-11; RED 1986 pp42-3; RED 1987 pp39-40; SR 1989 pp7-8; RED 1991 pp32-5; RED 1993 pp9-10, 27-9; RED 1995 pp15-16; SR 1996 pp6, 17-18; BP 1996 pp7-10; SR Jan 1998 pp11-13; SR Dec 98 pp13-16; SR 1999 pp26-7; SR 2002 pp25-7; SI 2002 ch. I; SR 2005 pp6, 9, 18; SR 2017 p6; SR 2018 pp12-13, 24; SR 2022 pp5-6, 13-14; SR 2023 pp10-12.
Additional sources: Kleivset (2012); Norges Bank (2022), Monetary Policy Handbook, available at https://www.norges-bank.no/en/news-events/news-publications/Reports/Norges-Bank-Papers/2022/memo-12022-monetary-policy-handbook/content/; Norges Bank, Monetary Policy Report, December 2023 pp40-1, 46-9.
Download the complete set of the advanced country details.
Monetary Policy Frameworks 