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
Sources: Statistics Norway and Norges Bank
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)
Source: Statistics Norway
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
Sources: Statistics Norway and Norges Bank
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
Sources: Statistics Norway and Norges Bank
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
Source: Statistics Norway
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
Source: Statistics Norway
Norges Bank
23
Investment intentions survey. Petroleum activitiesAssumed and actual investment. Quarterly figures. In billions of NOK
Source: Statistics Norway
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