The objective of the countercyclical capital buffer is to strengthen the resilience of the banking sector to an economic downturn and counter excessive fluctuations in the credit supply that may amplify the economic cycle. The buffer should be increased when financial imbalances build up. The buffer rate can be reduced in the event of an economic downturn and large bank losses, with a view to mitigating the procyclical effects of tighter bank lending. Norges Bank's advice on the buffer will primarily be based on four key indicators: Total credit to households and non-financial enterprises as a percentage of mainland GDP, the ratio of house prices to household disposable income, commercial property prices and the wholesale funding ratio of Norwegian credit institutions. There will not be a mechanical relationship between developments in the indicators and advice on the buffer. The advice will build on the Bank's professional judgement and take into account other requirements applying to banks. The indicators are not well suited to signalling when the buffer should be reduced. Other information, such as market turbulence and loss prospects for the banking sector, is more relevant.