1
Executive Board meeting
13 December 2006
Norges Bank
2
Growth forecast OECD
GDP. Annual change. Per cent
0 0.5 1 1.5 2 2.5 3 3.5 4
US Japan Euro area
OECD Forecast June Forecast November
0 0.5 1 1.5 2 2.5 3 3.5 4
US Japan Euro area
OECD Forecast June
Forecast November
2006 2007
Source: Consensus Forecasts
3
House prices
1)and housing starts in the US
Seasonally adjusted. 12-month change. 2) Jan 03 – Oct 06
-30 -20 -10 0 10 20
2003 2004 2005 2006
-30 -20 -10 0 10 20
1) Median price for dwellings
2) 3-quarter moving average
Existing homes New homes
Housing starts
Sources: Reuters EcoWin and Norges Bank
Norges Bank
4
0 10 20 30 40 50 60 70 80
80 82 84 86 88 90 92 94 96 98 00 02 04 06
0 10 20 30 40 50 60 70 80
1) Activity indicator for the business sector
Manufacturing
Non-manufacturing
US – ISM index
1)Index values. Monthly figures. Seasonally adjusted
Sources: EcoWin / Institute for Supply Management and NBER
5
Output gap
3-year moving average. Annual figures. 1972 -2005
-6 -4 -2 0 2 4
1972 1976 1980 1984 1988 1992 1996 2000 2004 -6 -4 -2 0 2 4
US
Source: OECD EO Database Germany1)
Japan
1) Estimated on the basis of data for West Germany in the period 1970-1990, Germany in the period 1991-2005.
Norges Bank
6
Oil price Brent Blend and futures prices
USD per barrel. 3 January 2002 – 11 December 2006
10 20 30 40 50 60 70 80 90
2002 2003 2004 2005 2006 2007 2008 2009 10 20 30 40 50 60 70 80 90
11 December 2006
Sources: Telerate, IPE and Norges Bank 26 October IR 3/06
7
CPI/HICP core
12-month change. January 1997 – October 2006
-2 -1 0 1 2 3 4
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 -2 -1 0 1 2 3 4
Source: EcoWin / National statistics UK1)
US 2)
Euro area 1)
Japan 3)
1)HICP excl. energy, food, alcohol and tobacco 2)CPI excl. food and energy 3)CPI excl. fresh food.
Norges Bank
Sources: Reuters and Norges Bank 8
0 1 2 3 4 5 6
Oct 03 Oct 04 Oct 05 Oct 06 Oct 07 Oct 08 Oct 09 0 1 2 3 4 5 6
US
Euro area 11 Dec 2006
IR 3/06 (31 Oct) Sweden
UK
Actual and expected key rates
as per IR 3/06 and 11 December 2006
9
5-year yield 5 years ahead
1 January 2002 -11 December 2006
0 2 4 6 8
2002 2003 2004 2005 2006
0 2 4 6 8
Germany US
Sources: Norges Bank and EcoWin Norway
Norges Bank
10
3.0 3.5 4.0 4.5 5.0 5.5 6.0
Mar 07 Sep 07 Mar 08 Sep 08 Mar 09 Sep 09 3.0 3.5 4.0 4.5 5.0 5.5 6.0
Norges Bank's and the market's overnight deposit rate scenario
At 11 December 2006
Market 11 Dec 2006 Baseline scenario IR 3/06
Sources: Reuters and Norges Bank Market
31 Oct 2006
11
-1 0 1 2 3 4 5
2002 2003 2004 2005 2006 2007 2008 2009
85 88 91 94 97 100 103
Sources: Bloomberg and Norges Bank I-44
(right-hand scale)
Weighted interest rate differential (left-hand scale)
31 Oct 06 (IR 3/06) 11 December 2006
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 2009
Average 1 – 12 December 06
Norges Bank
12
Various inflation indicators
12-month change. Per cent
-2.5 -1.5 -0.5 0.5 1.5 2.5 3.5 4.5 5.5
2002 2003 2004 2005 2006
-2.5 -1.5 -0.5 0.5 1.5 2.5 3.5 4.5 5.5
Source: Statistics Norway Weighted median
CPI-ATE 20 per cent trimmed mean
CPI
13
Expected consumer price inflation in 5 years
Per cent. Quarterly figures. 2002 Q2 - 2006 Q4
0 1 2 3 4
Jun 02 Dec 02 Jun 03 Dec 03 Jun 04 Dec 04 Jun 05 Dec 05 Jun 06 Dec 06 0 1 2 3 4
Experts Employers' organisations
Source: TNS Gallup Employees' organisations
Norges Bank
14
Wage growth - wages paid
Growth on same quarter previous year. Per cent. 1999 Q1 – 2006 Q3
0 2 4 6 8
1999 2000 2001 2002 2003 2004 2005 2006 2007 0 2 4 6 8
Manufacturing
Transport and communications
Source: Statistics Norway Retail trade
B&C Commercial services
and property management
Hotel and restaurant
15
-2 -1 0 1 2 3 4 5 6
1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 Old figures New figures
Mainland GDP
National accounts before and after the main revision.
Percentage annual growth. 1980 - 2005
Source: Statistics Norway
Norges Bank
16
2100 2200 2300 2400
1995 1997 1999 2001 2003 2005
2100 2200 2300 2400
Revised quarterly national accounts figures Old quarterly national accounts figures
Employment - National accounts
National accounts before and after main revision. In thousands.
1995 – 2005
Source: Statistics Norway
17
-5 5 15 25 35
2002 2003 2004 2005 2006
-5 5 15 25 35
Enterprise sector credit
1)and liquid assets
2)12-month growth. Per cent. January 2002 – October 2006 (C3 to Aug)
1) Mainland non-financial enterprises (C3).
2) Non-financial enterprises' liquid assets (M2).
Money supply (M2)
Source: Norges Bank Total credit (C3)
Norges Bank
18
House prices and household debt
Change on same month/quarter previous year. Per cent.
January 2001 November 2006
-5 0 5 10 15 20 25
2001 2002 2003 2004 2005 2006 6 8 10 12 14
2001 2002 2003 2004 2005 2006
House prices Household debt (C2)
Sources: Norwegian Association of Real Estate Agents, Association of Real Estate Agency Firms, Finn.no, ECON and Norges Bank
Real estate business
19
Monetary Policy Strategy - Inflation Report 3/06
• The Executive Board’s assessment is that the sight deposit rate should be in the interval 3¼ - 4¼% in the period to the
publication of the next Inflation Reporton 15 March 2007, conditional on economic developments that are broadly in line with the projections.
• “The interest rate may gradually be raised to a more normal level at a somewhat faster pace than envisaged earlier,
although it is unlikely that rates will be raised at every monetary policy meeting. In the light of our current assessment, the interest rate will thus continue to be raised in small, not too frequent steps."
Norges Bank
20 -2
-1 0 1 2 3
2004 2005 2006 2007 2008 2009 -2 -1 0 1 2 3
Baseline scenario in Inflation Report3/06
0 1 2 3 4 5 6 7 8 9
2004 2005 2006 2007 2008 2009 0 1 2 3 4 5 6 7 8 9
70 80 90 100 110
2004 2005 2006 2007 2008 2009 70 80 90 100 110
0 1 2 3 4
2004 2005 2006 2007 2008 2009 0 1 2 3 4
Import- weighted exchange rate
CPI-ATE Output gap
Sight deposit rate
Sources: Statistics Norway and Norges Bank
