The labour market, business cycles and monetary policy

Sources: Statistics Norway and Norges Bank.3.

The model suggests that the stronger downward nominal wage rigidity in Europe implies that pursuing zero inflation is more costly (in terms of higher unemployment) in Europe than in

High interest rates and the strong krone reflect real economic driving forces such as a high level of petroleum revenues, a tight labour market and strong growth in household

Sources: Norwegian Labour and Welfare Administration (NAV), Statistics Norway and Norges Bank.. Mainland GDP

3) EONIA in euro area from 2012 Q3 Sources: Bloomberg and Norges Bank.. Norges Bank's projections for market key rate expectations are used for Norway Sources: Bloomberg,

Steep increases in public sector allocations, growth in private consumption and strong growth in labour costs fuel high price inflation for goods and services produced in

3) EONIA for euro area from 2012 Q4 Sources: Bloomberg and Norges Bank.. Norges Bank's projections for market participant's key rate expectations are used for Norway Sources:

The analyses in Inflation Report 2/2006 point towards a relatively stable exchange rate and somewhat higher wage growth in the next few years. As a result, the real exchange rate will