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Executive Board meeting 25 June 2008

Executive Board meeting 25 June 2008. 1. Consumer prices 12-month change. Per cent. January 2004 – May 2008. CPI. 20 per cent trimmed mean. Weighted median. CPI-ATE 1). 1) CPI adjusted for tax changes and excluding energy products. 2. Source: Statistics Norway.

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Executive Board meeting 25 June 2008

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  1. Executive Board meeting25 June 2008 1

  2. Consumer prices12-month change. Per cent. January 2004 – May 2008 CPI 20 per cent trimmed mean Weighted median CPI-ATE1) 1)CPI adjusted for tax changes and excluding energy products. 2 Source: Statistics Norway

  3. CPI, CPI-ATE1) and CPIXE2)12-month change. Per cent. January 2004 – December 20083) CPI CPIXE CPI-ATE 1)CPI adjusted for tax changes and excluding energy products. 2)CPI adjusted for tax changes and excluding temporary changes in energy prices 3) Forecasts for June - December 2008 Sources: Statistics Norway and Norges Bank

  4. CPI-ATE1)Total and by supplier sector2).12-month change.Forecasts from PPR 1/08 (broken lines). Per cent. January 2004 – May 2008 Domestically produced goods and services (0,7) CPI-ATE Imported consumer goods (0,3) 1) CPI adjusted for tax changes and excluding energy products. 2) Norges Bank’s estimates. Sources: Statistics Norway and Norges Bank

  5. Expected CPI inflation 2 and 5 years ahead1)Per cent. 2002 Q2 – 2008 Q2 Expected inflation 5 years ahead Expected inflation 2 years ahead 1)Average of expectations of employer/employee organisations and academics and experts in the financial industry Source: TNS Gallup

  6. 3-month real interest rate1), real key policy interest rate1), 10-year real interest rate2)and the normal real interest rate in Norway3)Per cent. 1996 Q1 – 2008 Q24) 10-year real interest rate 3-month real interest rate Interval for normal real interest rate Key policy real interest rate 1) Deflated by the 12-quarter moving average (centred) of inflation measured by the CPI. Projections for the CPI from this Report form the basis for this estimate. 2) 10-year swap rate deflated by the inflation target. 3) Calculations may indicate that the normal real interest rate for Norway is currently in the lower end of the interval 2½ - 3½%. 4)For 2008 Q2 the average of daily figures 1 April 2008 to 20 June 2008 is used. Sources: Statistics Norway and Norges Bank

  7. Norges Bank's regional network: Capacity constraints Per cent. January 2005 – May 2008 Capacity 1) Labour2) 1) Share reporting that they would have some or considerable difficulty in accommodating an increase in demand. 2) Share who respond that the supply of labour will be a limiting factor for output/turnover. Source: Norges Bank

  8. Mainland GDP1)Four-quarter change. Seasonally adjusted. Per cent. 2006 Q1 – 2008 Q42) Mainland GDP MPR 2/08 SAM 1) In terms of market value 2) Projections for 2008 Q2- 2008 Q4. Sources: Statistics Norway and Norges Bank

  9. Price indices1) for Norwegian exports in NOK2002=100. 2002 Q1 – 2008 Q1 Oil price (Brent Blend) in USD per barrelFutures prices (broken lines) 23 June 08 28 May 08 10 Mar 08 (MPR 1/08) 1) In USD Sources: Thomson Reuters, Statistics Norway and Norges Bank

  10. Investment statistics for the petroleum industry. Estimated and actual investment (current prices). In billions of NOK. 2005 – 2009 Estimate published same year Source: Statistics Norway

  11. International commodity prices Index, week 1 2002 = 100. Week 1 2002 – Week 25 2008 Metals Industrials All items Food Non-food agriculturals 1) In USD Sources: Thomson Reuters, Statistics Norwayand Norges Bank

  12. Growth in consumer prices abroad12-month change. Per cent. January 2002 – May 2008 Russia Brasil US Sweden UK India1) China Japan Euro area 1) Wholesale prices Source: Thomson Reuters

  13. 23 June 2008 Market after the previous executive board meeting (28 May 2008) Key policy rates and forward rates28 May and 23 June 2008 US UK Norway Euro area Kilder: Thomson Reuters og Norges Bank

  14. 3-month interest rate differential and import-weighted exchange rate (I-44)1)January 2002 – December 2011 I-44 (left-hand scale) 23 June 2008 23 June 2008 28 May 2008 Weighted interest rate differential (right-hand scale) 1) A rising curve denotes an appreciation of the krone Source: Thomson Reuters and Norges Bank

  15. Real exchange rateDeviation from mean. 1970 – 2007. Per cent Mean January – June 20081) Relative wage costs Relative consumer prices Average ”oil age” Sources: Statistics Norway, Technical Reporting Committee on Income Settlements, Ministry of Finance and Norges Bank 1) Data for 2008 based on observations to 23 June

  16. Credit market Equities Mortgage market Norway OSEBX Europa Stoxx US, BBB S&P 500 Europe, BBB Credit derivatives market Bear Stearns UK JP Morgan Chase Denmark Merrill Lynch Spain European financials (Itraxx-index) Norway Germany Ireland Source: Thomson Reuters

  17. Difference between three-month money market rates and key policy rate expectations in the market1) Historical and ahead. Percentage points. At 23 June 2008 UK US Euro area Norway2) Sources: Bloomberg, Thomson Reuters and Norges Bank 1) The expected key rate is measured by the Overnight Indexed Swap (OIS). For Norway, the estimates are based on key policy rate expectations in the market.

  18. Banks’1) total interest margin Divided into deposit and lending margin2). Percentage points. End of quarter. 97 Q4 – 08 Q1 Total interest margin Lending margin Deposit margin 1) All banks in Norway 2) Deposit and lending margins are measured against 3-month money market rates Source: Statistics Norway

  19. Key policy rate, money market rate1) and banks’ lending rate on new loans2) In per cent. 3 May 2007 – 23 June 2008 Mortgage rate Money market rate Key policy rate 1) 3-month NIBOR 2)Interest rates on new mortgage loans for NOK 1 million within 60% of purchase price with floating interest rate. Figures for the 20 largest banks, weighted according to market share. Sources: Norsk familieøkonomi AS and Norges Bank

  20. Key policy rate in MPR 1/08 and MPR 2/08with fan chart from MPR 1/08 Per cent. 2006 Q1 – 2011 Q4 MPR 2/08 MPR 1/08 90% 70% 50% 30% Source: Norges Bank

  21. 90% 70% 50% 30% Baseline scenario in MPR 2/08 Key policy rate Output gap CPI CPIXE1) 1) CPIXE: CPI adusted for tax changes and excluding temporary fluctuations in energy prices Sources: Statistics Norway and Norges Bank

  22. Key policy rate Strategy interval 2/08 MPR 2/08 1/08 3/07 2/07 1/07 3/06 MPR 1/08 2/06 1/06 3/05 2/05 1/05 3/04 22 Source: Norges Bank

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