1
Executive Board meeting
27 June 2007
2
0 1 2 3 4 5 6 7 8
World North America
Western Europe
Japan Asia excl.
Japan
Eastern Europe
Latin America Projections May
Projections June
2007 2008
0 1 2 3 4 5 6 7 8
World North America
Western Europe
Japan Asia excl.
Japan
Eastern Europe
Latin America Forecasts May
Forecasts June
Growth forecasts Consensus Forecasts
GDP. Percentage change on previous year
Source: Consensus Forecasts
6
House prices 1) and housing starts in the US
Seasonally adjusted. 12-month rise
2)January 2003 – May 2007 (Housing starts April)
-35 -25 -15 -5 5 15
2003 2004 2005 2006 2007
-35 -25 -15 -5 5 15
1) Median price for dwellings
2) 3-month moving average
Housing starts Existing dwellings
New dwellings
Sources: Reuters and Norges Bank
Equities
Indices,1 November 2006 = 100. 1 November 2006 – 25 June 2007
90 100 110 120 130 140
Nov 06 Jan 07 Mar 07 May 07
90 100 110 120 130 140
Source: Reuters
US
Japan
Emerging economies
Norway
Euro area108 109 110 111 112 113 114
01/05 08/05 15/05 22/05 29/05 05/06 12/06 19/06
US
7
8
Oil price Brent Blend and futures prices
USD per barrel. 3 January 2002 – 25 June 2007
10 20 30 40 50 60 70 80 90
2002 2003 2004 2005 2006 2007 2008 2009
10 20 30 40 50 60 70 80 90
25 June 2007
Sources: Telerate, IPE and Norges Bank
Previous monetary policy
meeting (29 May 2007)
Current key policy rate for the G-10 currencies, and market expectations for the next 3 and 12 months 1)
Sources: Bloomberg and Reuters
10 9 8 7 6 5 4 3 2 1
Japan Japan
Japan
Switzerland Switzerland
Switzerland
Sweden Sweden
Euro area / Sweden Euro area
Euro area
Canada Canada
US Norway
Canada / Norway
Norway US
US
UK UK
UK
Australia Australia
Australia
New Zealand New Zealand
New Zealand
12-month 3-month
Current
1)At 26 June 2007. 9
Change in international effective exchange rates since MPR 1/07
At 25 June 2007
Sources: Norges Bank, Bank of England and Bloomberg 10
-7.1 %
-2.5 % -1.4 %
0.9 % 1.3 % 1.3 %
1.9 %
8.2 %
10.0 % 10.7 %
-10% -5% 0% 5% 10% 15%
JPY
CHF
USD
SEK
EUR
NOK
GBP
AUD
CAD
NZD
Sources: Reuters, Bloomberg and Norges Bank
Key policy rates and forward rates
As at previous monetary policy meeting and at 25 June 2007
11
1 2 3 4 5 6
Jan 05 Jan 06 Jan 07 Jan 08 Jan 09 Jan 10
1 2 3 4 5 6
US Euro area
25 June 2007
Previous monetary policy meeting (29 May)
Sweden UK
3.0 3.5 4.0 4.5 5.0
Jul 07 Nov 07 Mar 08 Jul 08 Nov 08 Mar 09 Jul 09 Nov 09
3.0 3.5 4.0 4.5 5.0
Market before MPR 1
Sources: Reuters and Norges Bank
Market after MPR 1
Market before MPR 2 Market after MPR 2
MPR1 MPR2
Interest rate paths Sweden
12
85 88 91 94 97 100 103
2002 2003 2004 2005 2006 2007 2008 2009 2010
-1 0 1 2 3 4 5
Sources: Bloomberg, Reuters and Norges Bank
I-44 (left-hand scale)
Weighted interest rate differential (right-hand scale)
25 June 2007
1)A rising curve denotes an appreciation of the krone.
3-month interest rate differential
and import-weighted exchange rate (I-44) 1)
January 2002 – December 2010
Average 1 - 25 June 2007
Previous monetary policy meeting (29 May 2007)
13
I-44 at 25 June 2007
Yields on 10-year government bonds
1 January 2006 – 22 June 2007
Sources: Reuters
3.0 3.5 4.0 4.5 5.0 5.5 6.0
Jan 06 Apr 06 Jul 06 Oct 06 Jan 07 Apr 07 3.0
3.5 4.0 4.5 5.0 5.5 6.0
Norway US
Euro area
Sweden
UK
-2 -1 0 1 2 3 4 5 6
2002 2003 2004 2005 2006 2007
-2 -1 0 1 2 3 4 5 6
Various inflation indicators
12-month change. Per cent. January 2002 – May 2007
Source: Statistics Norway Weighted median
CPI-ATE 20 per cent trimmed mean
CPI
14
13
-3 -2 -1 0 1 2 3
Jun-04 Dec-04 Jun-05 Dec-05 Jun-06 Dec-06 Jun-07 Dec-07 -3 -2 -1 0 1 2 3
Sources: Statistics Norway and Norges Bank
1) Norges Bank's projections.
CPI-ATE
Total and by supplier sector. Projections MPR 1/07.
12-month rise. Per cent. June 2004 – May 2007
Domestically produced gods and services (0.7)
1)Imported consumer goods (0.3)
1)CPI-ATE
-3 -2 -1 0 1 2 3
Jun 04 Dec 04 Jun 05 Dec 05 Jun 06 Dec 06 Jun 07 Dec 07 -3 -2 -1 0 1 2 3
Sources: Statistics Norway and Norges Bank
1) Norges Bank's projections.
CPI-ATE
Total and by supplier sector. Projections MPR 2/07.
12-month rise. Per cent. June 2004 – May 2007
Domestically produced gods and services (0.7)
1)Imported consumer goods (0.3)
1)CPI-ATE
Regional network - expectations of a rise in sales prices in the next 12 months
Diffusion index¹
)40 45 50 55 60 65
Jan 05
Apr 05
Jul 05
Oct 05
Jan 06
Apr 06
Jul 06
Oct 06
Jan 07
Apr 07
40 45 50 55 60 65
¹) Share that answer higher + (0.5 x share that answer unchanged).
Retail trade and household services Domestically oriented
manufacturing, building and construction and corporate services
Source: Norges Bank 15
Capacity utilisation and labour supply
Will the enterprise find it difficult to accommodate an (unexpected/expected) rise in demand? Per cent
0 10 20 30 40 50 60 70
Jan 05 Apr 05 Jul 05 Oct 05 Jan 06 Apr 06 Jul 06 Oct 06 Jan 07 Apr 07 0 10 20 30 40 50 60 70
Capacity utilisation
Labour supply
Source: Norges Bank 17
House prices
12-month rise, annualised seasonally adjusted monthly rise and annualised rise in 3-month, moving, centred average. Per cent
January 2002 – May 2007
-20 -10 0 10 20 30 40
2002 2002 2003 2003 2004 2004 2005 2005 2006 2006 2007
-20 -10 0 10 20 30 40
Seasonally adjusted monthly rise, annualised
12-month growth.
Annualised rise in 3-month moving average
Sources: Norwegian Association of Real Estate Agents, ECON, Finn.no, Association of Real Estate Agency Firms and Norges Bank
18
0 5 10 15 20
Jan 02 Jan 03 Jan 04 Jan 05 Jan 06 Jan 07 0 5 10 15 20
12-month growth
Growth in 3-month moving average, annualised
Growth in domestic credit (C2) to households
Per cent. Monthly figures. January 2002 – April 2007
Sources: Statistics Norway and Norges Bank 19
20
Property prices and corporate debt and liquid assets
Change on same month/half year previous year. Per cent.
January 2001 – April 2007 (C3 March)
-5 0 5 10 15 20 25
2001 2002 2003 2004 2005 2006 2007 -5
0 5 10 15 20 25 30 35 40
2001 2002 2003 2004 2005 2006 2007
Commercial property prices Debt
1)and liquid assets
2)Sources: Statistics Norway and Norges Bank
1) Mainland non-financial enterprises (C3).
2) Non-financial enterprises' liquid assets (M2).
Total credit (C3)
Money supply (M2)
0.0 0.3 0.6 0.9 1.2 1.5 1.8
06 Q1 06 Q3 07 Q1 07 Q3
0.0 0.3 0.6 0.9 1.2 1.5 1.8
Mainland GDP
Growth on previous quarter. Seasonally adjusted. Per cent 2005 Q1 – 2007 Q3
1)1) Projection for 07 Q2 and 07 Q3. See the box "Short-term projections for mainland GDP growth" in Inflation Report2/06 for a description of the different models.
Monthly indicator
BVAR MPR 2/07
ARIMA Actual
VAR Regional network
Sources: Statistics Norway and Norges Bank 21
0 2 4 6 8
2005 2006 2007 2008 2009 2010
0 2 4 6 8
Sources: Statistics Norway and Norges Bank
-2 -1 0 1 2 3
2005 2006 2007 2008 2009 2010
-2 -1 0 1 2 3
MPR 1/07
MPR 1/07
Output gap Key policy rate
MPR 2/07
MPR 2/07
0 1 2 3 4
2005 2006 2007 2008 2009 2010
0 1 2 3 4
MPR 1/07
CPI-ATE
MPR 2/07
0 1 2 3 4
2005 2006 2007 2008 2009 2010
0 1 2 3 4
MPR 2/07
MPR 1/07
CPI
22
Sources: Reuters and Norges Bank
3.0 3.5 4.0 4.5 5.0 5.5 6.0
07 Q3 08 Q1 08 Q3 09 Q1 09 Q3 10 Q1 10 Q3
3.0 3.5 4.0 4.5 5.0 5.5 6.0
Market 25 June 2007
Market before MPR 1/07 (14 March)
Key policy rate in baseline scenario and estimated forward rates 1)
Per cent. At 25 June 2007
I) A credit risk premium and a technical difference of 0.20 percentage point have been deducted to make the forward rates comparable with the key policy rate.
Baseline scenario MPR 2/07
23
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