Norges Bank Monetary Policy Report, March 2007
"Productivity is rising rapidly. Competition is restraining inflation and contributing to an efficient use of resources. Inward labour migration is increasing capacity in the Norwegian economy and curbing cost inflation.
"Monetary policy operates with a lag. It is appropriate to raise interest rates before inflation starts to rise. The cyclical upturn is in a mature phase. The enterprises in our regional network report that capacity constraints are now limiting further growth. Unemployment has fallen markedly over the past year. Wage growth appears to be rising, but so far only gradually. Prices for many inputs and services and building materials are rising markedly. Consumer price inflation is also expected to pick up further ahead. Thus, interest rates are rising.
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