Norway has a robust macroeconomic policy framework to manage the potentially destabilising impact of its oil wealth. Nonetheless, emerging macroeconomic imbalances due to the unusually large terms of trade shock may require flexibility in adaption of policy rules. The current strong growth in the real economy and the positive output gap must be seen against the back-drop of sustained low core inflation, reflecting monetary policy trade-offs inherent in the flexible inflation targeting regime. Still, monetary policy is faced with a difficult trade-off, as bringing inflation quickly up towards the inflation target may conflict with stable developments in production and employment.