EXECUTIVE BOARD MEETING

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EXECUTIVE BOARD MEETING

24 OCTOBER 2018

BASED ON INFORMATION IN THE PERIOD TO 22 OCTOBER 2018

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Monetary Policy Report 3/18, 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

85 90 95 100 105 110

2012 2014 2016 2018 2020

Output gap Key policy rate

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

Sources: Statistics Norway and Norges Bank

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3 45 50 55 60

45 50 55 60

2010 2011 2012 2013 2014 2015 2016 2017 2018

Manufacturing PMI Services PMI

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

Source: Thomson Reuters

PMI for Norway’s trading partners

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Global growth

Sources: IMF and Norges Bank 4

Historical average and projections from the IMF. Percent. 2016 – 2019

3.9

3.7

3 3.2 3.4 3.6 3.8 4

2016 2017 2018-19

World Economic Outlook, April World Economic Outlook, October Average 2009 - 2017

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Inflation for selected trading partners

5

Twelve-month change. Percent. January 2010 – September 2018

Core inflation Headline CPI

-1 0 1 2 3 4 5

2010 2012 2014 2016 2018 US

Euro area UK

Sweden

-1 0 1 2 3 4 5

2010 2012 2014 2016 2018 US

Euro area UK

Sweden

Source: Thomson Reuters

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Policy rates

6

Policy rates and estimated forward rates

¹⁾

. Percent. January 2011 – December 2021

1) Forward rates are based on Overnight Index Swap (OIS) rates. Daily data through 22 October 2018.

Quarterly data from 2019 Q1.

Sources: Bloomberg, Thomson Reuters and Norges Bank

-1 -0.5 0 0.5 1 1.5 2 2.5 3

2011 2013 2015 2017 2019 2021

US UK

Euro area Sweden 22 October MPR 3/18

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

7

Percent. 2012 Q1 – 2021 Q4

Sources: Thomson Reuters and Norges Bank

0 0.5 1 1.5 2

2012 2014 2016 2018 2020

MPR 3/18 22 October

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Global equity markets

8

Index. 1 January 2016 = 100. 1 January 2016 – 22 October 2018

60 80 100 120 140 160 180

2016 2017 2018

Emerging economies US

China Europe UK

MPR 3/18

Sources: Bloomberg and Norges Bank

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Crude oil spot and futures prices

9

USD/barrel. Daily data. January 2010 – December 2021

¹⁾

1) Futures prices are the average of futures prices for the period 16 October – 22 October 2018 (yellow broken line) and the period 10 September – 14 September 2018 (blue broke line).

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 MPR 3/18

MPR 3/18

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10

2 January 2014 – 22 October 2018. Projection to 2018 Q4

Import-weighted exchange rate index (I-44)

Source: Norges Bank

90

95

100

105

110 90

95

100

105

110

2014 2015 2016 2017 2018

I-44

Projection MPR 3/18 Average to date 2018 Q4

MPR 3/18

Stronger NOK

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Three-month money market premium

11

Percentage points. 1 January 2016 – 22 October 2018. Projection to 2018 Q4

Source: Norges Bank

0 0.2 0.4 0.6 0.8 1

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

Norwegian money market premium Projection MPR 3/18

Average to date 2018 Q4

MPR 3/18

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Lending rates

12

Change from previous quarter

¹⁾

. 2018 Q2 – 2018 Q4

1) 2/1 = Up a lot/a little, 0 = Approx. unchanged, -1/-2 = Down a little/a lot.

Source: Norges Bank’s Survey of Bank Lending

-2 -1.5 -1 -0.5 0 0.5 1 1.5 2

Q2 Q3 Q4 Q2 Q3 Q4

-2 -1.5 -1 -0.5 0 0.5 1 1.5 2

Reported developments Expected developments

Households Non-financial enterprises

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GDP mainland Norway

13

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

February 2016 – August 2018

Source: Statistics Norway

-3 -2 -1 0 1 2 3

-1 -0.5 0 0.5 1

Feb-16 Aug-16 Feb-17 Aug-17 Feb-18 Aug-18

Monthly growth (l.h.s) Three-month growth (r.h.s)

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Source: Statistics Norway 14

-2 -1 0 1 2

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

Total consumption Services consumption Goods consumption

Private consumption for households and non-profit organisations.

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

Private consumption

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Business tendency survey for manufacturing, mining and quarrying

15

Expected output growth. Seasonally adjusted diffusion index.

1990 Q1 – 2018 Q3

Source: Statistics Norway

30 35 40 45 50 55 60 65 70

1990 1993 1996 1999 2002 2005 2008 2011 2014 2017 Mining and quarrying

Average since 1990

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House prices

16

Percent. January 2015 – September 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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Fiscal policy

17

Structural non-oil deficit and 3% of the GPFG

¹⁾

. Share of trend GDP for mainland Norway. Percent. 2008 – 2021

²⁾

1) Global Pension Fund Global.

2) Projections for 2018 – 2021 (broken line and shaded bars).

Sources: Ministry of Finance and Norges Bank

0 2 4 6 8 10

2008 2010 2012 2014 2016 2018 2020

Structural non-oil deficit National Budget 2019 MPR 3/18

3% of the GPFG in NB19

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Unemployment

18

As a percentage of the labour force. Seasonally adjusted.

January 2012 – September/July 2018. Projections to December/October 2018

0 1 2 3 4 5 6

2012 2013 2014 2015 2016 2017 2018

NAV unemployment LFS unemployment Projections MPR 3/18

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

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Inflation

19

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

Projections to December 2018

0 1 2 3 4 5

2012 2013 2014 2015 2016 2017 2018

CPI CPI-ATE

Projections MPR 3/18

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SAM ¹⁾ forecasts for the CPI-ATE

20 1) System for Averaging short-term Models.

Four-quarter change. Percent. 2014 Q1 – 2018 Q2. Projections to 2018 Q4

0 1 2 3 4

2014 2015 2016 2017 2018

CPI-ATE

Projection MPR 3/18 SAM MPR 3/18 SAM 19 October

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