THE ROLE OF CENTRAL BANKS: A NORWEGIAN PERSPECTIVE
GOVERNOR ØYSTEIN OLSEN, OMFIF CITY LECTURE, 1 NOVEMBER 2016
Performance
2
Unemployment. Percent Inflation. Percent
Sources: Norwegian Labour and Welfare Administration (NAV), Statistics Norway and Norges Bank
-2 0 2 4 6 8 10 12 14
-2 0 2 4 6 8 10 12 14
1981 1988 1995 2002 2009 2016
Headline inflation Core inflation Inflation target
0 1 2 3 4 5 6 7
0 1 2 3 4 5 6 7
1980 1987 1994 2001 2008 2015
International interest rates
Long-term interest rates. 14 OECD countries 1) . Percent
0 2 4 6 8 10 12
0 2 4 6 8 10 12
1984 1989 1994 1999 2004 2009 2014
Real interest rate Nominal interest rate
1) US, Germany, France, Italy, UK, Japan, Netherlands, Austria, Belgium, Sweden, Denmark, Canada, Switzerland and Norway. Unweighted average.
Source: OECD
3
Forces driving the fall in the global real interest rate
4 Global real interest rate
Global savings and investment
Global investment Global savings
r*
Relative price of capital Public investment Lower growth prospects Demographic trends Greater income inequality Deleveraging
Persistent uncertainty
Increased savings in emerging
economies and oil-producing
countries
Norway: Interest rates
5
Percent
0 1 2 3 4 5 6 7 8
0 1 2 3 4 5 6 7 8
2008 2010 2012 2014 2016
Key policy rate Money market rate
Lending rate, households
Sources: Statistics Norway, Thomson Reuters and Norges Bank
Monetary policy and uncertainty
-4 -2 0 2 4 6 8 10
6
-4 -2 0 2 4 6 8 10
-4 -2 0 2 4 6 8 10
Inflation Policy rate
Output gap
Estimated path for consumption during recessions
7
Number of quarters from start of recession. Percent
1) Strong growth is defined as a rise of more than one standard deviation above the average. The rise is the average rise in the five years preceding the start of the recession.
Sources: BIS, Federal Reserve Bank of Dallas, OECD, Statistics Norway and Norges Bank
