MPR 1/14
DEPUTY GOVERNOR JAN F. QVIGSTAD
THE EXECUTIVE BOARD, 26 MARCH 2014
GDP growth for trading partners
Volume. Four quarter change. Percent. 2008 Q1 –2017 Q4
2
Sources: Thomson Reuters and Norges Bank
-6 -4 -2 0 2 4 6
-6 -4 -2 0 2 4 6
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 MPR 1/14
MPR 4/13
Yields on 10-year government bonds
0 1 2 3 4 5 6 7 8
0 1 2 3 4 5 6 7 8
2010 2011 2012 2013 2014
US UK Spain Italy Germany
MPR 3/13 MPR 4/13
Percent. 1 January 2010 – 24 March 2014
Sources: Bloomberg and Norges Bank
3
Estimated forward rates
0 1 2 3
0 1 2 3
2010 2012 2014 2016
US Euro area² ⁾ Sweden UK
Percent. 1 January 2010 – 31 December 2017 1)
4
1) Broken lines show estiamted forward rates at 29 November 2013. Thin lines show forward rates at 20 March 2014. Forward rates are based on Overnight Index Swap (OIS) rates. Daily data from 1 January 2012 and quarterly data from 2014 Q1.
3) EONIA for the euro area from 2014 Q1.
Sources: Bloomberg and Norges Bank
Commodities
0 20 40 60 80 100 120 140 160
0 50 100 150 200 250 300 350
2005 2007 2009 2011 2013 2015 2017
Copper (l.h.s.) Food (l.h.s.)
Oil (r.h.s.) Futures MPR 1/14 Futures MPR 4/13
Oil: USD/barrel. Copper and food, index: 2005 = 100. January 2005 – January 2018
Source: Thomson Reuters
5
Import−weighted exchange rate index (I-44)¹ )
80
85
90
95
100 80
85
90
95
100
2011 2012 2013 2014
I-44
Projections Q1 and Q2
1 January 2010 – 24 march 2014
6
1) A positive slope denotes a stronger krone exchange rate.
Source: Norges Bank
Petroleum investment
Constant 2011 prices. Annual change. Percent . 1992 − 2017
1)7
1) Projections for 2014 − 2017.
Sources: Statistics Norway and Norges Bank
-30 -20 -10 0 10 20 30
-30 -20 -10 0 10 20 30
1992 1995 1998 2001 2004 2007 2010 2013 2016
MPR 4/13
MPR 1/14
Structural non−oil deficit and four percent of the Government Pension Fund Global
0 50 100 150 200 250
2003 2005 2007 2009 2011 2013 2015 2017 0 50 100 150 200
Structural non-oil deficit 250
4 percent of GPFG
Constant 2014 prices. In billions of NOK. 2003 − 2017
1)1) Projections for 2014 − 2017.
8
Sources: Norges Bank and Ministry of Finance
GDP for mainland Norway
0 1 2 3 4 5
0 1 2 3 4 5
2010 2011 2012 2013 2014
Mainland GDP MPR 1/14 SAM
Regional network
Actual figures, baseline scenario, Norges Bank’s regional network
and projections from SAM 1) with fan chart. Four −quarter change. Volume.
Seasonally adjusted. Percent. 2010 Q1 − 2014 Q2 2)
9
1) System for averaging short−term models 2) Projections for 2014 Q1 − 2014 Q2 Sources: Statistics Norway and Norges Bank
30% 50% 70% 90%
Regional network – output growth
-10 -5 0 5 10
-10 -5 0 5 10
2002 2005 2007 2010 2012
Construction Retail trade Manufacturing Services
Actual growth past 3 months. Annualised. Percent
10
-10 -5 0 5 10
-10 -5 0 5 10
2002 2004 2007 2009 2012
Export industry Oil industry suppliers
Domestically oriented manufacturing
Source: Norges Bank’s regional network
10
Output gap
-2 -1 0 1 2 3 4
-2 -1 0 1 2 3 4
2006 2007 2008 2009 2010 2011 2012 2013 2014 2006 Q1 –2014 Q1. Percent. MPR 4/13 = MPR 1/14
Source: Norges Bank
11
Different indicators for consumer price inflation
Twelve month change. Percent. January 2009 – February 2014
12
Sources: Statistics Norway and Norges Bank
0 1 2 3 4 5
0 1 2 3 4 5
2009 2010 2011 2012 2013 2014
CPI 20 % trimmed average
CPI-ATE CPIXE
CPIM Weighted median
Underlying inflation
0 1 2 3
0 1 2 3
mar-13 jun-13 sep-13 dec-13 mar-14 jun-14
SAM MPR 4/13
CPI-ATE MPR 1/14
Four quarter change. Percent. 2011 Q1 – 2014 Q2
13
Sources: Statistics Norway and Norges Bank
Highest and lowest indicator for
underlying inflation
1¾ - 2¼ %
2 – 2½ %
Baseline scenario in MPR 1/14
Percent. 2008 Q1 – 2017 Q4 (MPR 4/13, broken yellow line)
0 1 2 3 4 5 6 7
0 1 2 3 4 5 6 7
2008 2010 2012 2014 2016
-4 -2 0 2 4
-4 -2 0 2 4
2008 2010 2012 2014 2016 Output gap
-1 1 3 5
-1 0 1 2 3 4 5
2008 2010 2012 2014 2016 CPI-ATE
14
Sources: Statistics Norway and Norges Bank
30% 50% 70% 90%
Key policy rate
Criteria
1. The inflation target is achieved
2. The inflation targeting regime is flexible
3. Monetary policy is robust
Factors behind changes in the interest rate forecast since MPR 4/13
Accumulated contribution. Percentage points
15
-2 -1 0 1 2
-2 -1 0 1 2
2014Q2 2014Q4 2015Q2 2015Q4 2016Q2 2016Q4
Demand
Prices and costs Interest rates abroad Exchange rate
Change in the interest rate forecast
Source: Norges Bank
Cross-check 1: Three−month money market rate in the baseline scenario 1) and estimated forward rates 2)
0 1 2 3 4 5 6 7 8
0 1 2 3 4 5 6 7 8
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Esitmated forward rates MPR 1/14 Esitmated forward rates MPR 4/13 Money market rate MPR 4/13 Money market rate MPR 1/14
Percent. 2008 Q1 – 2017 Q4
16
1) Key policy rate in the baseline scenario plus premiums in the Norwegian money market. The
calculations are based on the assumption that announced interest rate changes are priced into the money market.
2) Forward rates are based on money market rates and interest rate swaps. The purple and blue bands show the highest and lowest rates in the period 18 November − 29 November 2013
and 7 March − 20 March 2014
Sources: Thomson Reuters and Norges Bank
Cross-check 2: Key policy rate and interest rate
developments that follow from Norges Bank’s average pattern of interest rate setting 1)
0 1 2 3 4 5 6 7 8
0 1 2 3 4 5 6 7 8
2004 2006 2008 2010 2012 2014
90% confidence interval
Key policy rate in baseline scenario Percent. 2004 Q1 – 2014 Q3
17
1) Interest rate movements are explained by developments in inflation, mainland GDP growth,
wage growth and 3−month money market rates among trading partners, as well as the interest rate in the previous period. The equation is estimated over the period 1999 Q1 – 2013 Q3. See Norges Bank Staff Memo 3/2008 for further discussion.
Source: Norges Bank
Cross check 3: Different interest rates
0 1 2 3 4 5 6 7
0 1 2 3 4 5 6 7
2010 2011 2012 2013 2014
3-month money market rate Key policy rate
Lending rate, households Foreign money market rates
Percent. 2010 Q1 – 2013 Q4
18
1) Average interest rate on all loans to households from banks and mortgage companies.
Sources: Statistics Norway and Norges Bank
1)
Household saving
As a share of disposable income. Percent. 1978 − 2017
19
1) Projections for 2014−2017 (broken lines) Sources: Statistics Norway and Norges Bank
-5 0 5 10 15
-5 0 5 10 15
1978 1983 1988 1993 1998 2003 2008 2013
Savings ratio
Savings ration excluded share dividends
Key policy rate
0 1 2 3 4 5 6 7
0 1 2 3 4 5 6 7
2008 2009 2010 2011 2012 2013 2014 2015 2016
MPR 4/13 MPR 1/14
Strategy interval:
1 – 2 %t
Fan from MPR 4/13. Percent. 2008 Q1 – 2016 Q4
Source: Norges Bank
