Despite this, rising labour costs and higher import prices following depreciation of the krone have kept inflation relatively high. The authorities reacted promptly to problems in financial markets with a number of measures to restore the normal functioning of credit markets and stimulate output.

Further monetary easing, as projected by the central bank, is desirable if inflation pressures moderate faster than expected. Fiscal action has been considerable so far; significant further fiscal expansion in 2010 may be unnecessary if the economy recovers as projected and, given losses on the Government Pension Fund in 2009, some caution may be advisable.

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©OECD Observer No 274, July 2009