Executive Board meeting 14 December 2005

Norges Bank

1

Executive Board meeting14 December 2005

Norges Bank

2

-1

-0,5

0

0,5

1

1,5

2

2002 2003 2004 2005

-1

-0,5

0

0,5

1

1,5

2

GDP growth trading partners Seasonally adjusted volume growth on previous quarter.

Per cent. 02 Q1 – 05 Q3

Sources: EcoWin / National statistical offices and Norges Bank

US

Euro area

18 Trading partners

Sweden

Norges Bank

3

Growth forecasts for 2006 from Consensus Forecasts

0

1

2

3

4

5

6

7

8

World NorthAmerica

WesternEurope

Japan Asia excl.Japan

EasternEurope

LatinAmerica

Forecasts October Forecasts November

Source: Consensus Forecasts

Norges Bank

4

CPI/HICP1)

12-month change. Per cent. January 2002 – November 2005

0

1

2

3

4

5

2002 2003 2004 2005

0

1

2

3

4

5USA3)

Sverige2)1) Harmonised index of consumer prices

2) UND1X 3) Figures from October

Euroområdet

Storbritannia

Source: EcoWin\ Eurostat

Norges Bank

5

CPI core1)

12-month change. January 1999 – October 2005

-1

0

1

2

3

4

1999 2001 2003 2005

-1

0

1

2

3

4

US

Sweden

Euro area

UK

1) US: CPI excl. food and energy Euro area, UK and Sweden: CPI excl. energy, food, alcohol and tobacco

Source: EcoWin\ Eurostat

Norges Bank

6

Actual and expected key rates June 2003 – December 2008

0

1

2

3

4

5

jun 03 jun 04 jun 05 jun 06 jun 07 jun 08

0

1

2

3

4

5

Sources: Reuters and Norges Bank

US

Euro area

13 December

2 November

Sweden

UK

Norges Bank

7

Oil price Brent Blend and futures prices USD per barrel. 3 January 2002 –13 December 2005

10

20

30

40

50

60

70

2002 2003 2004 2005 2006 2007 2008

10

20

30

40

50

60

7013 December

27 October (IR 3/05)

Sources: Telerate, IPE and Norges Bank

Norges Bank

8

20

30

40

50

60

70

jan 04 mai 04 sep 04 jan 05 mai 05 sep 05

20

30

40

50

60

70

Oil futures pricesUSD per barrel light crude. 3 January 2004 –12 December 2005

Delivery in 6-7 years

Delivery in 1 month

Source: EcoWin/ NYMEX

Norges Bank

9

International commodity prices in USDIndices, Week 1 2000 = 100. Week 1 2000 - Week 49 2005

60

80

100

120

140

160

2000 2001 2002 2003 2004 2005

60

80

100

120

140

160

Source: EcoWin / The Economist

Agricultural products excl. food

Metals

Manufacturing

Norges Bank

10

Developments in international equity indicesTotal return. Indexed, 3 January 2005 = 100.

3 January 2005 – 12 December 2005

90

100

110

120

130

140

150

jan 05 mar 05 mai 05 jul 05 sep 05 nov 05

90

100

110

120

130

140

150Norway, OSEBX

US, S&P

Japan, Topix

Euro area, STOXX

Source: EcoWin

Norges Bank

11

CPI and CPI-ATE1)

12-month change. Per cent. January 2002 – November 2005

-3

-2

-1

0

1

2

3

4

5

6

2002 2003 2004 2005

-3

-2

-1

0

1

2

3

4

5

6

1) CPI-ATE: CPI adjusted for tax changes and excluding energy products

CPI

CPI-ATE

Source: Statistics Norway

Norges Bank

12

CPI-ATE 12-month change. Per cent. Broken lines are projections from IR 3/05.

January 2004 – November 2005

-4

-3

-2

-1

0

1

2

3

jan 04 mai 04 sep 04 jan 05 mai 05 sep 05

-4

-3

-2

-1

0

1

2

3

Sources: Statistics Norway and Norges Bank

Goods and services produced in Norway (0.7)1)

1) Norges Bank's calculations

Imported consumer goods (0.3)

CPI-ATE

Norges Bank

13

Expected CPI-ATE1) and output gap in 2005 Q4 Projections from IR 3/04 - IR 3/05. Per cent


Projections for 2005 Q4

CPI-ATE Goods and services produced in Norway

Imported consumer goods

Output

gap

IR 3/04 1.6 2.1 0.3 1

IR 1/05 1.4 2.3 -0.7 1 ¼

IR 2/05 1.3 2.4 -1.2 1

IR 3/05 1.2 2.0 -0.7 ¾

Updated IR 3/052) 1.2 2.0 -1.1

1) 4-quarter change2) Projections from Inflation Report 3/05 updated with actual figures for October and November

Norges Bank

14

3-month interest rate differential and import-weighted exchange rate (I-44) 1)

Monthly figures. January 2002 – December 2005

-1

0

1

2

3

4

5

2002 2003 2004 2005 2006

85

88

91

94

97

100

103

Sources: Bloomberg and Norges Bank

I-44 (right-hand scale)

Weighted 3-month interest rate differential

(left-hand scale)

13 December 2005

31 October 2005

1) A rising curve denotes a stronger krone exchange rate

Norges Bank

15

Norges Bank's and the market's overnight deposit rate scenario1)

0

1

2

3

4

5

des 05 jun 06 des 06 jun 07 des 07 jun 08 des 08

0

1

2

3

4

5

Interest rate scenario IR 3/05

Market before IR 3/05

Market now

1) The light grey and dark grey intervals indicate the highest and lowest interest rates, respectively, in the market's overnight deposit

rate scenario in the last 10 days before the Inflation Report (14 -27 Oct) and the last 10 days before 13 December.

Source: Norges Bank

Norges Bank

16

UnemployedIn thousands. Seasonally adjusted. January 2001 – November 2005

50

75

100

125

2001 2002 2003 2004 2005

50

75

100

125LFS unemploymentRegistered unemployed and

on labour market programmes

Registered unemployed

Sources: Statistics Norway and the Directorate of Labour

Norges Bank

17

2220

2240

2260

2280

2300

1998 1999 2000 2001 2002 2003 2004 2005

2247

2267

2287

2307

2327

LFS (left-hand scale)

QNA (right-hand scale)


Number employedFigures from LFS and QNA. In thousands. Monthly and quarterly figures.

February 1998 – September 2005

Norges Bank

18

0

2

4

6

8

10

12

05 Q3 05 Q4 06 Q1 06 Q2

0

2

4

6

8

10

12Actual house price changeModel projections

Average Oct/Nov

Source: Norges Bank

House prices4-quarter change. Actual change and model projections in IR 3/05. Per cent

Norges Bank

19

Credit growthTotal debt mainland Norway (C3). Domestic credit to households (C2)

12-month change. Per cent

-5

0

5

10

15

20

25

30

2000 2001 2002 2003 2004 2005

-5

0

5

10

15

20

25

30


Households (C2) (right-hand scale)

Total debt non-financial enterprises mainland Norway (C3)(left-hand scale)

Total debt mainland Norway (C3) (left-hand scale)

Norges Bank

20

Unit labour costs (ULC)1)

and domestic inflationChange on same period previous year

-3

0

3

6

9

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

-3

0

3

6

9

Domestic inflation


1) Mainland Norway excl. the energy sector. 3-quarter moving average (centred)

ULC

Norges Bank

21

Order backlogs and new orders in manufacturingUnrevised figures. Index. 1995 = 100. 1993 Q1 – 2005 Q3

50

75

100

125

150

175

200

1993 1995 1997 1999 2001 2003 2005

50

75

100

125

150

175

200


Order backlogs

New orders

Norges Bank

22

50

100

150

200

250

300

2002 2003 2004 2005

50

100

150

200

250

300

New orders building and construction Trend. Value index, 2000 = 100. 2002 Q1 - 2005 Q3

Construction

Dwellings

Other buildings


Norges Bank

23

Investment intentions survey. Petroleum activitiesAssumed and actual investment. Quarterly figures. In billions of NOK


20

40

60

80

May Aug Nov Feb May Aug Nov Feb

20

40

60

80

2002

2003

2004

2005

2006

Estimate published previous year

Final figuresEstimate published current year

Norges Bank

24

0

1

2

3

4

2004 2005 2006 2007 2008

0

1

2

3

4

-2

-1

0

1

2

2004 2005 2006 2007 2008

-2

-1

0

1

2

70

80

90

100

110

2004 2005 2006 2007 2008

70

80

90

100

110

Baseline scenario in Inflation Report 3/05

Import-weighted exchange rate

CPI-ATE Output gap

0

1

2

3

4

5

6

7

8

2004 2005 2006 2007 2008

0

1

2

3

4

5

6

7

8

Sight deposit rate

Norges Bank

25

Monetary Policy Strategy - Inflation Report 3/05

• "The Executive Board's assessment is that the sight deposit rate should be in the interval 2 – 3 per cent in the period to the publication of the next Inflation Report on 16 March 2006, conditional on economic developments that are broadly in line with the projections."

• The Executive Board's assessment is that the interest rate may gradually in small, not too frequent steps, be brought back towards a more normal level. The objective of bringing inflation back to target and anchoring inflation expectations nevertheless implies that monetary policy remains expansionary.

Norges Bank

26

Executive Board meeting14 December 2005

Documents

Executive Board meeting 14 December 2005