Executive Board meeting 31 October 2007

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1

Executive Board meeting

31 October 2007

Norges Bank

Inflation and interval for underlying inflation ¹⁾

12-month change. Per cent. January 2002 – September 2007

-2 0 2 4 6

2002 2003 2004 2005 2006 2007

-2 0 2 4 6

Highest indicator

Lowest indicator CPI

Sources: Statistics Norway and Norges Bank

1)Highest and lowest indicator of the CPI-ATE, a weighted median and the trimmed mean of the sub-indices in the CPI.

2

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-6 -3 0 3 6

2002 2004 2006 2008 2010

-6 -3 0 3 6

Domestically produced goods and services

CPI-ATE

Imported consumer goods

CPI-ATE

¹⁾

Total and broken down on imported and domestically produced goods and services.

²⁾

Projections from MPR 3/07 (broken line).

12-month change. Per cent

1)CPI adjusted for tax changes and excluding energy products. A further adjustment is made for the estimated effect of reduced maximum day-care prices in 2006

2) Norges Bank's projections.

3

Norges Bank

1 2 3 4 5 6

Jan 05 Jan 06 Jan 07 Jan 08 Jan 09 Jan 10

1 2 3 4 5 6

Norway US

Euro area

29 October 2007

After previous monetary policy meeting (27 September 2007) UK

Key policy rates and forward rates

27 September and 29 October 2007

Sources: Reuters (EcoWin), Bloomberg and Norges Bank 4

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0 0.2 0.4 0.6 0.8 1 1.2

Apr 07 Jun 07 Aug 07 Oct 07

0 0.2 0.4 0.6 0.8 1 1.2

Difference between money market rate and expected key policy rate ¹⁾

3-month maturity. Percentage points. 1 April – 29 October 2007

1)The expected key rate is measured by the Overnight Indexed Swap (OIS).

2) Norges Bank's projections.

UK Euro area

US

Norway²⁾

Sources: Bloomberg and Norges Bank 5

Norges Bank

0 1 2 3 4 5 6

Jan 04 Jul 04 Jan 05 Jul 05 Jan 06 Jul 06 Jan 07 Jul 07 0 1 2 3 4 5 6

Credit premia on BBB-graded corporate bonds and government bonds in emerging economies

5-year maturity. Percentage points. 1 January 2004 – 29 October 2007

Source: Reuters (EcoWin) US

Europe Emerging economies

6

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Market value of credit default swap indices

¹⁾

for different tranches of securities backed by subprime loans

19 July 2006 – 15 October 2007

Source: JPMorgan Chase

0 10 20 30 40 50 60 70 80 90 100 110

Jul 06 Sep 06 Nov 06 Jan 07 Mar 07 May 07 Jul 07 Sep 07 0 10 20 30 40 50 60 70 80 90 100 110

AAA

BBB AA A

BBB-

1)CDSs issued in the second half of 2006 7

Norges Bank

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 (EcoWin) and Norges Bank I-44

(left-hand scale)

Weighted interest rate differential (right-hand scale)

29 October 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 - 29 October 2007

After previous monetary policy meeting (27 September 2007)

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0 2 4 6 8 10 12

World US Euro a

rea Jap

an UK China

India Russia September

October

0 2 4 6 8 10 12

World US Euro ar

ea Jap

an UK

China India

Russia September

October

Source: IMF World Economic Outlook

2007 2008

Growth forecasts from the IMF GDP. Percentage change on previous year

9

Norges Bank

80 90 100 110 120 130 140 150

Jan 07 Mar 07 May 07 Jul 07 Sep 07

80 90 100 110 120 130 140 150

Source: Reuters (EcoWin) US

Japan Emerging economies

Norway

Euro area

Equities

Indices, 1 January 2007 = 100. 1 January 2007 – 29 October 2007

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Average prices for crude oil and natural gas

1997 Q1 – 2007 Q3

0 100 200 300 400 500

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 0 10 20 30 40 50 60 70 80 90

Sources: Reuters (EcoWin), Statistics Norway, Statoil and Norsk Hydro Norwegian gas (left-hand scale)

Weighted average

gas price Statoil/Hydro (left-hand scale)

Brent Blend, USD/barrel (right-hand scale)¹⁾

Gas price UK (left-hand scale)¹⁾ Gas price

USD/1000 Sm³

Oil price USD per barrel

1)Average daily figures to date in 2007 Q4

11

Norges Bank

Global commodity prices in USD

Indices, 2000 = 100. Week 1 2000 – Week 43 2007

50 100 150 200 250 300 350

2000 2001 2002 2003 2004 2005 2006 2007

50 100 150 200 250 300 350

Sources: Reuters (EcoWin) and The Economist Industrials

Metals

Commodity index

Non-food agriculturals Food

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Prices for aluminium

Price per kg. Measured in NOK and USD. Week 1 2000 – Week 43 2007

0 1 2 3 4 5

2000 2001 2002 2003 2004 2005 2006 2007

0 5 10 15 20

Sources: Reuters (EcoWin) USD (left-

hand scale)

NOK (right- hand scale)

13

Norges Bank

Price of fresh salmon ¹⁾

NOK per kilo. Week 1 2000 – Week 42 2007

1)Exports

10 20 30 40

Jan 00 Jan 01 Jan 02 Jan 03 Jan 04 Jan 05 Jan 06 Jan 07 10 20 30 40

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Statistical models of mainland GDP

Actual and projections for 2007 Q3 – Q4. Quarterly growth. Seasonally adjusted. Excluding electricity. Per cent. 2006 Q1 – 2007 Q4

0 0.5 1 1.5 2

06 Q1 06 Q3 07 Q1 07 Q3

0 0.5 1 1.5 2

Mainland GDP Monthly indicator BVAR

VAR ARIMA Regional network

Average MPR 3/07

Sources: Statistics Norway and Norges Bank 15

Norges Bank

Enterprise sector credit ¹⁾ and liquid assets ²⁾

12-month growth

³⁾

. Per cent. January 2000 – August 2007 (C3 to July)

-5 0 5 10 15 20 25 30 35 40

2000 2001 2002 2003 2004 2005 2006 2007 -5 0 5 10 15 20 25 30 35 40

Source: Statistics Norway Total credit (C3)

Money supply (M2)

1) Mainland non-financial enterprises (C3).

2) Non-financial enterprises' liquid assets (M2).

3)Transaction-based growth estimate

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National accounts

Household net lending

Total last four quarters. In billions of NOK. 2002 Q4 – 2007 Q2

-100 -80 -60 -40 -20 0 20 40 60

Dec 02 Dec 03 Dec 04 Dec 05 Dec 06

-100 -80 -60 -40 -20 0 20 40 60

Financial sector accounts (FINSE)

Sources: Statistics Norway and Norges Bank National accounts, excluding

reinvested dividends 2002–2005

17

Norges Bank

Domestic credit to households (C2)

12-month growth. Per cent. January 2000 – August 2007

0 4 8 12 16

2000 2001 2002 2003 2004 2005 2006 2007 0 4 8 12 16

Source: Statistics Norway 18

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12-month change in house prices

By county and region. Per cent. January 2006 – September 2007

0 5 10 15 20 25 30

Jan 06 Jul 06 Jan 07 Jul 07

0 5 10 15 20 25 30

Hedmark Agder

Whole of Norway Oslo

Rogaland

Sources: Norwegian Association of Real Estate Agents, Association of Real Estate Agency Firms, FINN.no, ECON Pöyry, Statistics Norway and Norges Bank ¹⁹

Norges Bank

0 5 10 15 20 25 30 35 40 45

Dec 01 Dec 02 Dec 03 Dec 04 Dec 05 Dec 06

0 5 10 15 20 25 30 35 40 45

Turnover of new dwellings in Eastern Norway

Per cent. December 2001 – October 2007

Sources: Statistics Norway, ECON Pöyry and Norges Bank Rate of sales 2²⁾

Rate of sales 1¹⁾

1)Turnover 1 is defined as the number of dwellings sold as a share of the total number of dwellings in the registered projects

2)Turnover 2 is defined as the number of dwellings sold during a period as a share of the number of vacant dwellings at the end of the previous period and the number of dwellings that have entered the market in the past two months

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Underlying spending growth in the government budget and nominal growth in mainland GDP

Per cent. 1985 – 2008

¹⁾

0 5 10 15

1985 1990 1995 2000 2005

0 5 10 15

Sources: Ministry of Finance (National Budget 2008) and Statistics Norway

Underlying spending growth Growth in mainland GDP

1)Projections for 2007 and 2008 from the Ministry of Finance 21

Norges Bank

Expected real return on the Government Pension Fund - Global

In billions of 2008-NOK. 2002 – 2010

0 30 60 90 120

2002 2004 2006 2008 2010

0 30 60 90 120

Expected real return (NB 2008) Structural, non-oil deficit

Source: Ministry of Finance (National Budget 2008) 22

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Norges Bank

0 2 4 6 8

2005 2006 2007 2008 2009 2010 0 2 4 6 8

-2

-1 0 1 2 3 4

2005 2006 2007 2008 2009 2010 -2 -1 0 1 2 3 4

Baseline scenarios in MPR 2/07 and MPR 3/07

MPR 2/07

MPR 2/07 Output gap

Key policy rate

MPR 3/07

0 1 2 3 4

2005 2006 2007 2008 2009 2010 0 1 2 3 4

MPR 2/07 CPI-ATE

MPR 3/07

0 1 2 3 4

2005 2006 2007 2008 2009 2010 0 1 2 3 4

MPR 3/07 MPR 2/07

CPI

23

Norges Bank

Interest rate path in different Reports

Fan chart from IR 2/06

0 1 2 3 4 5 6 7 8

2004 2005 2006 2007 2008 2009

0 1 2 3 4 5 6 7 8

30% 50% 70% 90%

Source: Norges Bank IR 1/06

IR 2/06

IR 3/06 MPR 2/07 MPR 3/07

IR 3/05 MPR 1/07

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Sources: Reuters and Norges Bank

4 4.5 5 5.5 6

07 Q40 08 Q2 08 Q4 09 Q2 09 Q4 10 Q2 10 Q4

4 4.5 5 5.5 6

Market 29 October 2007

Key policy rate in baseline scenario and estimated forward rates ¹⁾

Per cent. At 29 October 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.

Market 27 September 2007 Baseline scenario MPR 3/07

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Norges Bank