EXECUTIVE BOARD MEETING

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EXECUTIVE BOARD MEETING

23 JANUARY 2019

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Monetary Policy Report 4/18, overall picture

-1 0 1 2 3

2012 2014 2016 2018 2020

2 -3 -2 -1 0 1 2

-3 -2 -1 0 1 2

2012 2014 2016 2018 2020

0 1 2 3 4

2012 2014 2016 2018 2020 8590

95 100 105 110

85 90 95 100 105 110

2012 2014 2016 2018 2020

Output gap Policy rate

Inflation (CPI-ATE) Exchange rate index (I-44)

Sources: Statistics Norway and Norges Bank

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PMI for Norway’s trading partners

3

Manufacturing and services PMI. 25 main trading partners. Export weights. January 2010 – December 2018

Source: Thomson Reuters

45 50 55 60

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Manufacturing PMI Services PMI

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Global growth

1) Projections to 2020. 4

Sources: IMF and Norges Bank

Historical average and projections from the IMF. Percent.

2016 – 2017

¹⁾

3 3.2 3.4 3.6 3.8 4

2016 2017 2018 2019 2020

World Economic Outlook, April 2018 World Economic Outlook, October 2018

World Economic Outlook update, January 2019 Average 2009 - 2017

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Inflation for selected trading partners

5

Twelve-month change. Percent. January 2010 – November/December 2018

Core inflation Headline CPI

-1 0 1 2 3 4 5

2010 2012 2014 2016 2018 USEuro area

UKSweden

-1 0 1 2 3 4 5

2010 2012 2014 2016 2018 USEuro area

UKSweden

Source: Thomson Reuters

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Policy rates

6

Policy rates and estimated forward rates

¹⁾

. Percent. 21 January 2019 (solid line) and MPR 4/18 (broken line)

1) Forward rates are based on Overnight Index Swap (OIS) rates.

Sources: Bloomberg, Thomson Reuters and Norges Bank

-1 -0.5 0 0.5 1 1.5 2 2.5 3

2012 2013 2014 2015 2016 2017 2018 2019 2020 2021

US UK

Euro area Sweden

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Money market rates for Norway’s trading partners

7

Three-month money market rates for Norway’s trading partners.

Percent. 2012 Q1 – 2018 Q4

¹⁾

1) Projections to 2021 Q4.

Sources: Thomson Reuters and Norges Bank

0 0.5 1 1.5 2

2012 2014 2016 2018 2020

MPR 4/18

21 January 2019

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Long-term government bond yields

8

Ten-year government bonds. Percent. 1 January 2016 – 21 January 2019

Source: Bloomberg

-1 0 1 2 3 4

Jan-16 Jul-16 Jan-17 Jul-17 Jan-18 Jul-18 Jan-19

US UK

Germany Norway Italy

MPR 4/18

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Global equity markets

9

Index. 1 January 2016 = 100. 1 January 2016 – 21 January 2019

Sources: Bloomberg and Norges Bank

80 100 120 140 160 180

Jan-16 Jun-16 Nov-16 Apr-17 Sep-17 Feb-18 Jul-18 Dec-18 US

China Europe UK Norway

MPR 4/18

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Crude oil spot and futures prices

10

USD/barrel. Daily data. January 2010 – January 2019

¹⁾

1) Futures prices at 21 January 2019 (broken lines) to December 2021.

Sources: Thomson Reuters and Norges Bank

0 20 40 60 80 100 120 140

2010 2012 2014 2016 2018 2020

Spot prices Futures prices

Futures prices at MPR 4/18

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Import-weighted exchange rate index (I-44)

11

2 January 2016 – 21 January 2019

Source: Norges Bank

98

102

106

110 98

102

106

110

Jan-16 May-16 Sep-16 Jan-17 May-17 Sep-17 Jan-18 May-18 Sep-18 Jan-19 I-44Projection MPR 4/18

Average Q1

Stronger

NOK

MPR 4/18

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Three-month money market premium

12

Percentage points. 1 January 2015 – 21 January 2019

¹⁾

0 0.2 0.4 0.6 0.8 1

Jan-15 Jan-16 Jan-17 Jan-18 Jan-19 Jan-20 Jan-21 Norwegian money market premium

Projection MPR 4/18

1) Projections to December 2021.

Sources: Bloomberg and Norges Bank

MPR 4/18

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GDP mainland Norway

13

Monthly and three-month growth. Seasonally adjusted. Percent.

February 2016 – March 2019

¹⁾

1) Projections for 2018 Q4 – 2019 Q1.

-1 -0.5 0 0.5 1 1.5

-1.0 -0.5 0.0 0.5 1.0 1.5

Feb-16 Aug-16 Feb-17 Aug-17 Feb-18 Aug-18 Feb-19 Monthly growth Three-month growth Quarterly projections MPR 4/18

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Private consumption

14

Private consumption for households and non-profit organisations.

Three-month growth. Seasonally adjusted. Percent. June 2016 – November 2018

Source: Statistics Norway

-2 -1 0 1 2

Jun-16 Dec-16 Jun-17 Dec-17 Jun-18

Total consumption Services consumption Goods consumption

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Consumer confidence

15

Consumer Confidence Index (CCI) and Kantar TNS Consumer Sentiment Index. Net values. January 2008 – December 2018

Sources: ForbrukerMeteret from Opinion and TNS Kantar

-30 -20 -10 0 10 20 30 40 50

-15 -10 -5 0 5 10 15 20 25

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Consumer Confidence Index (CCI), Opinion (l.h.s.) Cosumer Sentiment Index, TNS Kantar (r.h.s.) Average 2007 Q2 - 2018 Q4

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House prices

16

Percent. January 2015 – December 2018

Sources: Eiendomsverdi, Finn.no and Real Estate Norway

2015 2016 2017 2018 -10

-5 0 5 10 15

-2 -1 0 1 2 3

Seasonally adjusted monthly change (l.h.s.) Twelve-month change (r.h.s.)

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Credit growth

17

C2. Percent. January 2015 – November 2018

¹⁾

Non-financial enterprises, mainland Norway

Households

1) Projections to March 2019.

4 5 6 7 8

2015 2016 2017 2018 2019 Twelve-month change in C2

Projections MPR 4/18

0 4 8 12

2015 2016 2017 2018 2019 Twelve-month change in C2 Projections MPR 4/18

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Norwegian Petroleum Directorate projections

18

Petroleum investment. Annual change. Percent. 2012 – 2017

¹⁾

1) Projections to 2021.

Sources: Norwegian Petroleum Directorate, Statistics Norway and Norges Bank

-20 -15 -10 -5 0 5 10 15 20

2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Norwegian Petroleum Directorate MPR 4/18

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Unemployment

19

As a percentage of the labour force. Seasonally adjusted.

January 2012 – October / December 2018

¹⁾

1) Projections to January / March 2019.

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

0 1 2 3 4 5 6

2012 2013 2014 2015 2016 2017 2018 2019

NAV unemployment Gross unemployment LFS unemployment Projections MPR 4/18

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Inflation

20

Twelve-month change. Percent. January 2012 – December 2018

¹⁾

0 1 2 3 4 5

2012 2013 2014 2015 2016 2017 2018 2019

CPI CPI-ATE

Projections MPR 4/18

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CPI-ATE by supplier sector

21

Twelve-month change. Percent. January 2012 – December 2018

¹⁾

-2 -1 0 1 2 3 4 5 6

2012 2013 2014 2015 2016 2017 2018 2019

Imported consumer goods

Domestically produced goods and services Projections MPR 4/18

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CPI and indicators of underlying inflation

22

Twelve-month change. Percent. January 2002 – December 2018

1) The band shows the highest and lowest values for CPIM, CPIXE, 20% trimmed mean, weighted median, CPI-XV and CPI common.

-2 0 2 4 6

2002 2004 2006 2008 2010 2012 2014 2016 2018

Indicators¹⁾ CPI-ATE CPI

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SAM ¹⁾ projections for the CPI-ATE

23 1) System for Averaging short-term Models.

2) Projections to 2019 Q2.

Four-quarter change. Percent. 2014 Q1 – 2018 Q4

²⁾

0 1 2 3 4

2014 2015 2016 2017 2018 2019

CPI-ATE

Projections MPR 4/18 SAM MPR 4/18

SAM 10 January

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