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Charts for Inflation Report2/2003
Summary
Chart 1 Projected CPI-ATE and output gap1) with a sight deposit rate of 4 per cent and import-weighted krone exchange rate equal to the average for 3/6-19/6 (I-44= 93.5). Per cent
CPI-ATE
Output gap
-2
-1
0
1
2
3
2002 2003 2004 2005-2
-1
0
1
2
3
1) The output gap is a measure of the difference between actual and trend output. See box in IR 1/03
Sources: Statistics Norway and Norges Bank
-2
-1
0
1
2
3
2002 2003 2004 2005-2
-1
0
1
2
3
Chart 2 Projected CPI-ATE and output gap1) with forward interest rate and gradual exchange rate depreciation of 3 per cent. Per cent
CPI-ATE
Output gap
1) The output gap is a measure of the difference between actual and trend output. See box in IR 1/03
Sources: Statistics Norway and Norges Bank
0
1
2
3
4
2001 2002 2003 2004 20050
1
2
3
4
CPI-ATE
Sources: Statistics Norway and Norges Bank
Forward interest rate and forward exchange rate
Forward interest rate and forward exchange rate without impact on wage growth
Chart 3 Projected CPI-ATE with forward interest rate and gradual exchange rate depreciation of 3 per cent. 12-month rise. Per cent
240
250
260
270
280
290
300
1998 1999 2000 2001 2002 2003240
250
260
270
280
290
300
Source: Statistics Norway
Chart 1.1 Mainland GDP. In billions of 2000-NOK. Seasonally adjusted. 1998 Q1 - 2003 Q1
Chart 1.2 Three-month money market rates in the US and Norway. Jan 1995 - May 2003
0
2
4
6
8
10
1995 1997 1999 2001 20030
2
4
6
8
10
Sources: EcoWin and Norges Bank
Norway
US
2.22
2.24
2.26
2.28
2.30
1998 1999 2000 2001 2002 20032.22
2.24
2.26
2.28
2.30
Source: Statistics Norway
Chart 1.3 Employed persons according to LFS. In millions. Seasonally adjusted. Jan 98 - March 03
Chart 1.4 Unemployed (LFS), registered unemployed and persons participating in labour market programmes. Percentage of labour force. Seasonally adjusted1). Jan 95 - May 03
0
2
4
6
8
1995 1997 1999 2001 20030
2
4
6
8Registered unemployed and labour market programmes
Registered unemployed
LFS unemployment
1) LFS unemployment: 3-month moving average
Sources: Statistics Norway and the Directorate of Labour
Chart 1.5 Annual wage growth in Norway. Including costs of additional vacation days. Per cent. 1996-2003
0
1
2
3
4
5
6
7
1996 1997 1998 1999 2000 2001 2002 20030
1
2
3
4
5
6
7
Sources: Technical Reporting Committee on Income Settlements (TRCIS) and Norges Bank
Chart 1.6 Prices for consumer goods adjusted for tax changes and excluding energy products (CPI-ATE). Total1) and by supplier sector2). 12-month rise. Per cent. Jan 99 - May 03
-4
-2
0
2
4
6
1999 2000 2001 2002 2003-4
-2
0
2
4
6
1) Norges Bank's estimates up to and including July 2000, thereafter figures published by Statistics Norway2) Norges Bank's estimates
Sources: Statistics Norway and Norges Bank
Goods and services produced in Norway
CPI-ATE
Imported consumer goods
Chart 1.7 Prices for some imported consumer goods adjusted for tax changes. 12-month rise. Per cent. Jan 99 - May 03
-12
-9
-6
-3
0
3
6
1999 2000 2001 2002 2003-12
-9
-6
-3
0
3
6
Sources: Statistics Norway and Norges Bank
Cars
Clothing and footwear
Audio-visual equipment
Chart 1.8 Prices for some imported consumer goods adjusted for tax changes. Annual figures. Index. 1990=100
60
80
100
120
140
1990 1992 1994 1996 1998 2000 200260
80
100
120
140
Sources: Statistics Norway and Norges Bank
Footwear
Domestic appliances
Audio-visual equipment
Clothing
Chart 1.9 CPI-ATE. Goods and services produced in Norway. 12-month rise. Per cent. Jan 99 - May 03
0
2
4
6
8
1999 2000 2001 2002 20030
2
4
6
8
1) Excluding agricultural and fish products
Sources: Statistics Norway and Norges Bank
Consumer goods produced in Norwayexcluding energy products1)
House rent
Services with wages as dominating price factor
Other services
Chart 1.10 Consumer prices. Total and adjusted for tax changes and excluding energy products. 12-month rise. Per cent. Jan 99 - May 03
0
1
2
3
4
5
6
1999 2000 2001 2002 20030
1
2
3
4
5
6
CPI-AT: CPI adjusted for tax changesCPI-ATE: CPI adjusted for tax changes and excluding energy products1) Norges Bank's estimates up to and including July 2000, thereafter figures published by Statistics Norway
Sources: Statistics Norway and Norges Bank
CPI
CPI-AT1)
CPI-ATE1)
Chart 1.11 Electricity prices. Index. 1 January 1998=100
50
100
150
200
250
300
350
2000 2001 2002 200350
100
150
200
250
300
350
Sources: Statistics Norway, Nordpool, the Norwegian Water Resources and Energy Directorate and Norges Bank
Electricity in the CPI
Spot price including tax and grid rental
Chart 1.12 Import-weighted exchange rate (I-44), trade-weighted exchange rate index1) and interest rate differential against other countries. Jan 95 - May 03
-2
-1
0
1
2
3
4
5
1995 1997 1999 2001 2003
80
90
100
110
120
TWI (right-hand scale)
I-44 (right-hand scale)
3-month interest rate differential(left-hand scale)
1) A rising curve denotes an appreciation of the krone
Source: Norges Bank
Chart 1.13 The krone exchange rate against EUR and USD1). Weekly figures. 12 Jan 02 - 19 June 03
6
7
8
9
10Jan 02 Apr 02 Jul 02 Oct 02 Jan 03 Apr 03 Jul 03
6
7
8
9
10
NOK against EUR
NOK against USD
1) A rising curve denotes an appreciation of the krone
Source: Norges Bank
Chart 1.14 Effective exchange rates1). Index. Week 1/2002=100. Weekly figures. 4 Jan 02 -18 June 03
95
100
105
110
115
120
Jan 02 Jul 02 Jan 03 Jul 0395
100
105
110
115
120
Iceland
Canada
1) A rising curve denotes an appreciation of the exchange rate
Source: EcoWin
Australia
Norway
Euro area
New Zealand
Source: Norges Bank
Chart 1.15 Three-month money market rates and forward rates, 1995-2013. Monthly figures
-2
0
2
4
6
8
95 97 99 01 03 05 07 09 11 13-2
0
2
4
6
8Actual
Forward
Norway
Trading partners
Difference
Sources: EcoWin and Norges Bank
Chart 1.16 Developments on the Oslo Stock Exchange (OSEBX) and 5-year government bond yields. Daily figures, 01.06.02 -19.06.03
40
60
80
100
Jun 02 Sep 02 Dec 02 Mar 03 Jun 033
4
5
6
7
OSEBX(left-hand scale)
5-year government bond yields(right-hand scale)
Source: Norges Bank
Chart 1.17 Strategy intervals for the sight deposit rate and actual developments. Nov 02 - June 03
4.0
4.5
5.0
5.5
6.0
6.5
7.0
7.5
8.0
4.0
4.5
5.0
5.5
6.0
6.5
7.0
7.5
8.0
Nov 02 Jan 03 Mar 03 May 03
Interval in Strategy Document 1/03
Sight deposit rate
Interval in Strategy Document 3/02
Chart 1.18 Interest rate expectations in the US. Actual developments and expected key rate1)
0
2
4
6
1999 2000 2001 2002 2003 2004 20050
2
4
6
1 July 02Key rate
24 Oct 02
28 May 03
7 Apr 03
19 June 03
1) Based on Fed Funds futures and Eurodollar futures adjusted for the estimated spread between 3-month Libor and Fed Funds rates
Source: Norges Bank
Chart 1.19 Interest rate expectations in the euro area. Actual developments and expected key rate1)
0
2
4
6
1999 2000 2001 2002 2003 2004 20050
2
4
6
Key rate
24 Oct 02
28 May 037 Apr 03
1 July 02
19 June 03
1) Based on Euribor futures adjusted for the estimated spread between 3-month Euribor and Refi rates
Source: Norges Bank
Chart 1.20 Interest rate expectations in Norway. Actual developments and expected key rate1).
2
4
6
8
1999 2000 2001 2002 2003 20042
4
6
8
Key rate
25 Oct 02
26 May 03
7 Apr 03
19 June 03
1 July 02
1) Based on FRA and currency swap markets, adjusted for estimated difference in level and credit risk in relation to the sight deposit rate
Source: Norges Bank
Chart 2.1 GDP growth in the US, Japan, the euro area and among Norway's trading partners combined. Seasonally adjusted growth in volume on previous quarter. Per cent
-2
-1
0
1
2
-2
-1
0
1
2
2001 2002 2003
US Japan
Euro area Trading partners
Sources: EcoWin, US Department of Commerce, ESRI (Japan), EURO-OP Eurostat and Norges Bank
Chart 2.2 The oil price and some financial market indicators. Index. Week 1 2002 = 100
60
80
100
120
140
160
180
Jan 02 Jul 02 Jan 0360
80
100
120
140
160
180
Sources: EcoWin, IPE, S&P Credit Indices, Wilshire Associates and Norges Bank
Oil price (Brent Blend)
Long-term rates, US (10-year gov't)
Yield spread speculative corporate bonds/US government bonds
Equities US (Wilshire 5000)
Chart 2.3 Projections for GDP growth among trading partners in 2003 made at different times
0
1
2
3
4
Jan 02 Jul 02 Jan 03 Jul 030
1
2
3
4
Sources: Consensus Forecasts and Norges Bank
Norges Bank
Consensus Forecasts
Chart 2.4 Net wealth/disposable income and saving ratio in the US. Quarterly figures 1960-2003. Dashed lines show period averages
3
4
5
6
7
1960 1970 1980 1990 2000
0
2
4
6
8
10
12
14
Sources: EcoWin, US Department of Commerce, Federal Reserve Board and Norges Bank
Net wealth/disposable income (left-hand scale)
Saving ratio (inverted) (right-hand scale)
Chart 2.5 EUR/USD exchange rate.1 Jan 1999 - 19 June 2003
0.7
0.9
1.1
1.3
1999 2000 2001 2002 20030.7
0.9
1.1
1.3
Source: EcoWin
Chart 2.6 Unemployment as a share of the labour force. Seasonally adjusted. Jan 97 - May 03
7
9
11
13
15
1997 1999 2001 20037
9
11
13
15
Sources: EcoWin, EUR-OP Eurostat, Federal Labour Office (Germany), National Employment Agency (France), Istat (Italy) and Norges Bank
Spain
ItalyFrance
Euroarea
Germany
Chart 2.7 Oil price, Brent Blend. USD per barrel. Daily figures.
0
10
20
30
40
1999 2000 2001 2002 2003 20040
10
20
30
40
Sources: Telerate, IPE and Norges Bank
Futures prices19 June 2003
IR 2/03
Chart 2.8 Historical consumer price inflation and projections from Norges Bank. Annual percentage rise 1995-2005
-2
0
2
4
1995 1997 1999 2001 2003 2005-2
0
2
4
Sources: EcoWin, Bureau of Labor Statistics (US), Ministry of Public Management, Home Affairs, Posts and Telecom (Japan), EUR-OP Eurostat and Norges Bank
Trading partners
Euro area
US
Japan
Chart 2.9 Wage growth and rise in prices for services in the CPI. Percentage change on same quarter previous year
0
1
2
3
4
5
1997 1998 1999 2000 2001 2002 20030
1
2
3
4
5
Sources: Datastream, EcoWin, EUR-OP Eurostat and Bureau of Labor Statistics (US)
US
Euro area
Services in the CPI
Wage growth
Chart 2.10 Rise in prices for goods in the CPI. Percentage change on same quarter previous year
-3
-2
-1
0
1
2
3
1997 1998 1999 2000 2001 2002 2003-3
-2
-1
0
1
2
3
Source: Datastream
US, excl. food and energy
UK
Euro area, excl. food and energy
Japan
Chart 2.11 Historical and expected key rates as of 19 June 20031)
0
2
4
6
1999 2000 2001 2002 2003 20040
2
4
6
1) See further details on calculation of interest rate expectations in Charts 1.18 and 1.19
Sources: EcoWin, Bloomberg, Bank of England, Bank of Japan and Norges Bank
UK
Euro area
US
Japan
Chart 3.1 Wage shares. Labour costs as a percentage of factor income 1993-2002
55
65
75
85
95
1993 1995 1997 1999 200155
65
75
85
95
Sources: TRCIS and Statistics Norway
Manufacturing
Other market-oriented mainland industry
-15
0
15
1970 1980 1990 2000-15
0
15
1) Hourly labour costs in manufacturing2) Estimates for 2003. The estimate for relative labour costs for 2003 in a common currency is based on the exchange rate on 19 June 2003.
Sources: TRCIS, Ministry of Finance and Norges Bank
Chart 3.2 Relative labour costs¹): Norway and trading partners. Deviation from average since 1970. Per cent. 1970-20032)
Local currency
Common currency
Chart 3.3 Business confidence indicator for manufacturing. Seasonally adjusted diffusion index1). 1990 Q1 - 2003 Q1
-10
-5
0
5
10
15
1990 1992 1994 1996 1998 2000 2002-10
-5
0
5
10
15
1) A value of less than 0 implies that the majority of manufacturing leaders expect a weaker outlook in the next quarter.
Sources: Statistics Norway and Norges Bank
Chart 3.4 Number of bankruptcies and vacancy rate in the office rental market1). 1991-20032)
4
6
8
10
12
1991 1994 1997 2000 20033000
4000
5000
6000
Average vacancy rate in Oslo (left-hand scale)
Bankruptcy proceedings initiated (right-hand scale)
1) Vacancy rate in office rental market in Oslo alone2) The vacancy rate figure for 2003 is as of February
Source: Statistics Norway and Eiendomspar AS
Chart 3.5 Total domestic credit (C2) and credit to non-financial enterprises. 12-month growth. Jan 98 - Apr 03
0
5
10
15
20
1998 1999 2000 2001 2002 20030
5
10
15
20
Credit tonon-financial enterprises
Total domestic credit
Source: Norges Bank
Chart 3.6 Household saving ratio and growth in real disposable income. 1990-2002
0
2
4
6
8
1990 1992 1994 1996 1998 2000 20020
2
4
6
8
Saving ratio
Real disposable income
Sources: Statistics Norway and Norges Bank
Chart 3.7 Consumer confidence indicator1). Unadjusted figures. 1999 Q1 - 2003 Q2
-30
-15
0
15
30
45
1999 2000 2001 2002 2003-30
-15
0
15
30
45
Total
Personal financial situation
Country's economic situation
1) Provides an expression of the share with a positive assessment of the current situation and outlook for the future less the share with a negative assessment
Source: TNS Gallup
Chart 3.8 House prices and credit to households. 12-month rise. Per cent. Jan 98 - Apr 03
-5
0
5
10
15
20
25
1998 1999 2000 2001 2002 2003-5
0
5
10
15
20
25
Credit to households
House prices
Sources: Norwegian Association of Real Estate Agents, Association of Real Estate Agency Firms,FINN.co, ECON and Norges Bank
Chart 3.9 Household interest burden¹) and debt as a percentage of disposable income. 1980-2002
90
110
130
150
170
1980 1984 1988 1992 1996 20000
3
6
9
12
Sources: Statistics Norway and Norges Bank
Interest burden(right-hand scale)
Debt(left-hand scale)
1) Interest expenses after tax as a percentage of disposable income plus interest expenses
Chart 3.10 Change in structural non-oil budget balance1). 1990-2005
-3
-2
-1
0
1
2
-3
-2
-1
0
1
2
1990 1992 1994 1996 1998 2000 2002 20041) The budget balance as a percentage of trend mainland GDP; change on previous year.
Source: Revised National Budget 2003
Chart 3.11 Structural non-oil deficit. Percentage of trend mainland GDP.
0
1
2
3
4
5
6
2001 2003 2005 2007 20090
1
2
3
4
5
6
National Budget 2002
Revised National Budget 2003
Source: The Ministry of Finance
National Budget 2003
Chart 3.12 Estimates for public consumption 2003-2004 made at different times. Annual percentage growth
0
1
2
3
4
Jan 01 Jul 01 Jan 02 Jul 02 Jan 03 Jul 030
1
2
3
4
2003
2004
Source: Norges Bank
Chart 3.13 Job vacancies advertised per business day. Seasonally adjusted. Jan 00 - May 03
0
300
600
900
1200
2000 2001 2002 20030
300
600
900
1200
Source: Directorate of Labour
Chart 3.14 Change in employment on previous year. Per cent. Unemployment1) as a percentage of the labour force. 1980-2003
0
2
4
6
8
1980 1985 1990 1995 2000-4
-2
0
2
4
1) LFS unemployment
Sources: Statistics Norway and Norges Bank
LFS unemployment(left-hand scale)
Employed(right-hand scale)
Chart 3.15 Change in labour force on previous year. Per cent. Labour force as a percentage of population aged 16-74 (labour force participation rate) 1980-2003
67
69
71
73
75
1980 1985 1990 1995 2000-4
-2
0
2
4
Sources: Statistics Norway and Norges Bank
Labour force participation rate(left-hand scale)
Change in labour force (right-hand scale)
Chart 4.1 Alternative assumptions for the money market rate. Forward rates1) and assumption of a sight deposit rate of 4 per cent2).
0
2
4
6
8
10
2000 2001 2002 2003 2004 20050
2
4
6
8
10
1) 3-month money market rates up to and including May 2003. 3-month forward rates are estimated using 4 money market rates and 5 government bond yields with different maturities as observed on 19 June.2) The money market rate is normally about ¼ percentage point higher than the sight deposit rate.Source: Norges Bank
Forward interest rate 19 June
Constant interest rate2)
3-month money market rate
Chart 4.2 Alternative assumptions for the krone exchange rate (I-44). Forward rate and stable exchange rate equal to average 3/6-19/6 (I-44= 93.5). Index
80
90
100
110
1999 2001 2003 200580
90
100
110
Source: Norges Bank
Forward rate 19 June
Import-weighted exchange rate, I-44
Average 3/6-19/6
Chart 4.3 Estimated effect of historical exchange rate movements on rise in prices for imported consumer goods. Contribution in percentage points to 4-quarter rise. 2001 Q1 - 2006 Q4
-4.5
-3.5
-2.5
-1.5
-0.5
0.5
1.5
-4.5
-3.5
-2.5
-1.5
-0.5
0.5
1.5
2001 2002 2003 2004 2005 2006
Source: Norges Bank
Chart 4.4 Consumer prices and producer prices among trading partners. 1995-2005. Annual rise. Per cent
-2
-1
0
1
2
3
4
5
6
1995 1997 1999 2001 2003 2005-2
-1
0
1
2
3
4
5
6
Sources: EcoWin and Norges Bank
Consumer prices
Producer prices
Chart 4.5 Annual wage growth1) and unemployment rate2). 1993-2003. Per cent
0
2
4
6
1993 1995 1997 1999 2001 20030
2
4
6
1) Average for all groups. Including costs of additional vacation days2) Registered unemployed as a percentage of the labour force
Sources: TRCIS, Directorate of Labour and Norges Bank
Unemployment rate
Annual wage growth
Chart 4.6 Air fares. Adjusted for taxes. 12-month rise. Jan 01 - May 03. Per cent
-10
-5
0
5
10
15
20
25
30
Jan 01 Jul 01 Jan 02 Jul 02 Jan 03-10
-5
0
5
10
15
20
25
30
Sources: Statistics Norway and Norges Bank
Chart 4.7 Consumer prices for food and non-alcoholic beverages in Norway and Sweden. Not adjusted for taxes. Index. Jan 1990 = 100
85
95
105
115
125
135
1990 1992 1994 1996 1998 2000 200285
95
105
115
125
135
Norway
Sweden
Sources: EcoWin, Statistics Sweden and Statistics Norway
Chart 4.8 Expected consumer price inflation in 2 years
0
1
2
3
4
Jun 02 Sep 02 Dec 02 Mar 03 Jun 030
1
2
3
4
Experts
Employee organisations Employers' organisations
Source: TNS Gallup
Chart 4.9 Expected consumer price inflation in 5 years
0
1
2
3
4
Jun 02 Sep 02 Dec 02 Mar 03 Jun 030
1
2
3
4
Experts
Employee organisations
Employers' organisations
Source: TNS Gallup
0
1
2
3
4
2001 2004 2007 20100
1
2
3
4
Inflation projection published in April 2003
Chart 4.10 Consumer price inflation. Historical developments and market participants' projections for future consumer price inflation according to a survey by Consensus Economics. Per cent
Sources: Consensus Economics and Statistics Norway
Chart 4.11 Monetary policy assumptions. Sight deposit rate of 4 per cent and import-weighted krone exchange rate equal to the average for 3/6-19/61) (I-44=93.5)
84
88
92
96
1002002 2003 2004 2005
0
2
4
6
8
1) A rising curve denotes an appreciation of the krone
Source: Norges Bank
Money market rate (right-hand scale)
Krone exchange rate (I-44)(left-hand scale)
Chart 4.12 Projections and uncertainty for CPI-ATE with a sight deposit rate of 4 per cent and import-weighted krone exchange rate equal to the average for 3/6-19/6 (I-44= 93.5). 12-month growth. Per cent
0
1
2
3
4
5
2001 2002 2003 2004 20050
1
2
3
4
5
30% 50% 70% 90%
1) Adjusted for tax changes and excl. energy products (CPI-ATE)
The bands in the fan indicate different probabilities for consumer price inflation.
Sources: Statistics Norway and Norges Bank
Chart 4.13 Projected CPI-ATE and output gap1) with a sight deposit rate of 4 per cent and import-weighted krone exchange rate equal to the average for 3/6-19/6 (I-44= 93.5). Per cent
CPI-ATE
Output gap
-2
-1
0
1
2
3
2002 2003 2004 2005-2
-1
0
1
2
3
1) The output gap is a measure of the difference between actual and trend output. See box in IR 1/03
Sources: Statistics Norway and Norges Bank
Chart 4.14 Interest rate in line with forward interest rate and gradual exchange rate depreciation of 3 per cent1) 84
88
92
96
1002002 2003 2004 2005
0
2
4
6
8
1)A rising curve denotes an appreciation of the krone
Source: Norges Bank
Money market rate (right-hand scale)
Krone exchange rate (I-44)(left-hand scale)
Chart 4.15 Projections and uncertainty for CPI-ATE with forward interest rate and gradual exchange rate depreciation of 3 per cent. 12-month rise. Per cent
0
1
2
3
4
5
2001 2002 2003 2004 20050
1
2
3
4
5
30% 50% 70% 90%
1) Adjusted for tax changes and excl. energy products (CPI-ATE)
The bands in the fan indicate different probabilities for consumer price inflation.
Sources: Statistics Norway and Norges Bank
Chart 4.16 Projected CPI-ATE and output gap1) with forward interest rate and gradual exchange rate depreciation of 3 per cent. Per cent
CPI-ATE
Output gap
-2
-1
0
1
2
3
2002 2003 2004 2005-2
-1
0
1
2
3
1) The output gap is a measure of the difference between actual and trend output. See box in IR 1/03
Sources: Statistics Norway and Norges Bank
Chart 4.17 Projections for CPI-ATE based on different interest rate and exchange rate assumptions. 12-month rise. Per cent
0
1
2
3
4
2001 2002 2003 2004 20050
1
2
3
4
CPI-ATE
Sources: Statistics Norway and Norges Bank
Forward interest rate and forward exchange rate
Interest rate of 4 per cent and exchange rate 3/6-19/6, I-44= 93.5
Forward interest rate and forward exchange rate without impact on wage growth
0
1
2
3
4
5
6
7
0 2 4 6 80
1
2
3
4
5
6
7
02-0300-01
98-99
96-97
94-95
Registered unemployed and persons on labour market programmes as a percentage of the labour force
Annu
al w
age
grow
th (i
ncl.
cost
s of
ad
ditio
nal v
acat
ion
days
)
Chart 4.18 Phillips curve. 2-year average
04-051)
1) Estimates based on a sight deposit rate of 4 per cent and a constant krone exchange rate
Source: Norges Bank
Charts for boxes and annexes
Low consumer
price inflation
Chart 1 CPI-ATE, projections and uncertainty in IR 2/02. 12-month rise. Per cent
0
1
2
3
4
5
2001 2002 2003 20040
1
2
3
4
5
30% 50% 70% 90%
Sources: Statistics Norway and Norges Bank
Average value April and May 2003: 1.4
Chart 2 CPI-ATE Total1) and by supplier sector2). 12-month rise. Per cent. Jan 99 - May 03.
-4
-2
0
2
4
6
1999 2000 2001 2002 2003-4
-2
0
2
4
6
1) Norges Bank's estimates up to and including July 2000, thereafter figures published by Statistics Norway2) Norges Bank's estimates
Sources: Statistics Norway and Norges Bank
Goods and services produced in Norway
CPI-ATE
Imported consumer goods
Chart 3 Import-weighted exchange rate (I-44)1) and interest rate differential against trading partners. Daily figures.
0
1
2
3
4
2000 2001 2002 2003
80
90
100
110
I-44 (right-hand scale)
3-month interest rate differential (left-hand scale)
1) A rising curve denotes an appreciation of the krone
Source: Norges Bank
Chart 4 Isolated effect of historical exchange rate movements on rise in prices for imported consumer goods (blue line) and actual rise in prices for imported consumer goods, historical (red) and projections (green). Percentage points
-4.5
-3.5
-2.5
-1.5
-0.5
0.5
1.5
2001 2002 2003 2004 2005 2006-4.5
-3.5
-2.5
-1.5
-0.5
0.5
1.5
Source: Norges Bank
Chart 5 CPI-ATE projections in IR 2/02 and IR 2/03. Isolated effect of altered exchange rate.
0.5
1
1.5
2
2.5
3
3.5
Jul 01 Jul 02 Jul 03 Jul 040.5
1
1.5
2
2.5
3
3.5Contribution to inflation from exchange rate
IR 2/02
Sources: Statistics Norway and Norges Bank
IR 2/03
Chart 6 CPI-ATE projections in IR 2/02 and IR 2/03. Isolated effect of lower wage projections.
0.5
1
1.5
2
2.5
3
3.5
Jul 01 Jul 02 Jul 03 Jul 040.5
1
1.5
2
2.5
3
3.5Contribution of lower wage estimates to inflation IR 2/02
Sources: Statistics Norway and Norges Bank
IR 2/03
Chart 7 CPI-ATE projections in IR 2/02 and IR 2/03. Combined effect of actual exchange rate and lower wage projections (sum of Charts 5 and 6)
0.5
1
1.5
2
2.5
3
3.5
Jul 01 Jul 02 Jul 03 Jul 040.5
1
1.5
2
2.5
3
3.5Shift: new exchange rate and lower wages*)
IR 2/02
*) The green line shows how the projection from IR 2/02 would be changed by incorporating the exchange rate path and wage developments as they are incorporated today.
Sources: Statistics Norway and Norges Bank
IR 2/03
Evaluation of inflation reports in inflation-targeting countries
Chart 1 Overall evaluation (1 = poor, 10 = good)
012
34567
89
10
UKNe
w Ze
al.Br
azil
Thail
and
Chile
Czec
h Re
p.Ice
land
Norw
aySw
eden
Philip
pines
Israe
lCa
nada
Mex
icoHu
ngar
ySw
itzer
land
Polan
dSo
uth
Afric
aAu
strali
aPe
ruKo
rea
012
34567
8910
Source: "How Do Central Banks Write?"
Why does household debt growth remain
high?
Chart 1 Actual and estimated household gross debt. Percentage change over 4 quarters
-2
0
2
4
6
8
10
12
1994 1996 1998 2000 2002-2
0
2
4
6
8
10
12
Source: Norges Bank
Actual debt growth
Estimated debt growth
Source: Norges Bank
0
2
4
6
8
10
12
0
2
4
6
8
10
12
2002 2003 2004 2005
Chart 2 Projection of household gross debt. Percentage change from previous year.
Levels of real capital in enterprises still too
high?
-20
-10
0
10
20
-20
-10
0
10
20
Chart 1 US GDP and investment.Growth on same quarter previous year. Two years before and two years after the trough of the economic cycle.
-2
0
2
4
6
8
-2
0
2
4
6
8
Sources: EcoWin, NBER and Norges Bank
Current recession
Previous recessions1)
-2 yr -1 yr Trough +1 yr +2 yr
GDPInvestments excluding housing
Previous recessions1)
Current recession
1) Non-weighted average over the last 5 recessions
-2 yr -1 yr Trough +1 yr +2 yr
10
15
20
1982 1986 1990 1994 1998 200210
15
20
Chart 2 Private investment in the US, excluding housing. As a percentage of GDP. Volume
Sources: EcoWin, NBER and Norges Bank
Historical average 1982-2002
Strategy Document 1/03
Chart 1 Real interest rate. 1966-2002
-4
-2
0
2
4
6
8
10
65 70 75 80 85 90 95 00-4
-2
0
2
4
6
8
10
Source: Norges Bank
Average
Chart 2 Real exchange rate. 1970-2002.
-10
-5
0
5
10
15
20
70 75 80 85 90 95 00-10
-5
0
5
10
15
20
Source: Norges Bank
Average
Chart 3a Alternative 1: The krone exchange rate remains strong.
84
88
92
96
1002002 2003 2004 2005
0
2
4
6
8
Source: Norges Bank
Money market rate (right-hand scale)
Krone exchange rate (I-44)(left-hand scale)
Chart 3b Alternative 1: The krone exchange rate remains strong.
Source: Norges Bank
CPI-ATE
Output gap
-1
0
1
2
3
2002 2003 2004 2005-1
0
1
2
3
Chart 4a Alternative 2: The krone exchange rate weakens. Forward interest rate and forward exchange rate
84
88
92
96
1002002 2003 2004 2005
0
2
4
6
8
Source: Norges Bank
Money market rate (right-hand scale)
Krone exchange rate (I-44)(left-hand scale)
Chart 4b Alternative 2: The krone exchange rate weakens. Forward interest rate and forward exchange rate
Source: Norges Bank
0
1
2
3
2002 2003 2004 20050
1
2
3
CPI-ATE
Output gap
Annexes 4 and 5
0
2
4
6
8
10
1995 1996 1997 1998 1999 2000 2001 2002 20030
2
4
6
8
10
Source: Norges Bank
Sight deposit rate
3-month money market rate
3-month money market rate and sight deposit rate. Monthly figures. Jan 1995 - May 2003
0
1
2
3
4
5
6
7
1995 1996 1997 1998 1999 2000 2001 2002 20030
1
2
3
4
5
6
7
1) Theoretical ECU rate up to December 1998
Source: Norges Bank
Euro area1)
US
Japan
3-month rates in the US, the euro area and Japan. Per cent. Monthly figures, Jan 1995 - May 2003
85
90
95
100
105
110
115
1995 1996 1997 1998 1999 2000 2001 2002 200385
90
95
100
105
110
115
Source: Norges Bank
Import-weighted exchange rate, I-44(1995=100)
Trade-weighted exchange rate index, TWI (1990=100)
Trade-weighted exchange rate index and import-weighted exchange rate I-44. Monthly figures, Jan 1995-May 2003
0
5
10
15
1997 1998 1999 2000 2001 2002 20030
5
10
15
Source: Norges Bank
Credit to households
C2
The credit indicator (C2), credit to households and total credit to the non-financial private sector and municipalities, mainland Norway (C3). 12-month rise. Per cent. Monthly figures, Jan 1995 - Apr 03. 2003.
C3 mainland Norway
Alternative assumptions for the krone exchange rate (I-44). Forward rate and stable exchange rate equal to average 3/6-19/6 (I-44= 93.5). Index
80
90
100
110
1999 2001 2003 200580
90
100
110
Source: Norges Bank
Forward rate 19 June
Import-weighted exchange rate, I-44
Average 3/6-19/6
Alternative assumptions for money market rate. Forward rates1) and assumption of a sight deposit rate of 4 per cent2)
0
2
4
6
8
10
2000 2001 2002 2003 2004 20050
2
4
6
8
10
1) 3-month money market rates up to and including May 2003. 3-month forward rates are estimated using 4 money market rates and 5 government bond yields with different maturities as observed on 19 June.2) The money market rate is normally ¼ percentage point higher than the sight deposit rate.Source: Norges Bank
Forward interest rate19 June
Constant interest rate2)
3-month money market rate
