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Executive Board meeting 24 September 2008

Executive Board meeting 24 September 2008. 1. Financial incidents. Bear Stearns, 17 March Roskilde Bank, 24 August Fannie Mae and Freddie Mac, 7 September Merrill Lynch, 14 September Lehman Brothers, 14 September AIG, 17 September HBOS , 17 September. CDS prices for selected banks

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Executive Board meeting 24 September 2008

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  1. Executive Board meeting24 September 2008 1

  2. Financial incidents • Bear Stearns, 17 March • Roskilde Bank, 24 August • Fannie Mae and Freddie Mac, 7 September • Merrill Lynch, 14 September • Lehman Brothers, 14 September • AIG, 17 September • HBOS, 17 September

  3. CDS prices for selected banks Basis points. 2 July 2007 – 22 September 2008 UBS Bank of America iTraxx Europe index JPMorgan Chase Citigroup DnB NOR Source: Bloomberg

  4. Effective yields on covered bonds 5-7 years average term to maturity. Percentage points 5 January 2004 – 19 September 2008 UK Denmark Spain Norway1) Ireland Germany 1) The regulation relating to covered bonds entered into force on 01.06.07 Sources: Bloomberg and Reuters EcoWin

  5. Difference between money market rates and expected key rates1)Percentage points. 5-day moving average 2 July 2007 – 22 September 2008 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.

  6. EquitiesIndices, 1 July 2007 = 100. 1 July 2007 – 22 September 2008 Emerging markets Norway, OSEBX US, S&P 500 Europe Stoxx Japan, Topix Source: Thomson Reuters

  7. Implied volatility from equity options 1 January 2005 – 19 September 2008 Norway US Europe Sources: Reuters EcoWin and Oslo Stock Exchange

  8. Global Risk Index Expected volatility between USD, EUR and JPY in per cent1)1 January 2005 – 22 September 2008 1) GRI is based on implied volatility derived from prices on 3-month currency options between EUR, USD and JPY (equally weighted) Source: Bloomberg

  9. Implied volatility in the Norwegian exchange marketBased on 1-month currency option prices 1 January 2005 – 22 September 2007 Volatility USDNOK Volatility EURNOK Source: Bloomberg

  10. 3-month interest rate differential and import-weighted exchange rate (I-44)1)January 2002 – December 2010 I-44 (right-hand scale) 23 September 2008 22 September 2008 25 June 2008 Weighted interest rate differential (left-hand scale) 1) A rising curve denotes an appreciation of the krone. Sources: Reuters and Norges Bank

  11. Growth forecasts Consensus ForecastsGDP. Percentage change on previous year 2008 2009 Source: Consensus Forecasts

  12. Oil price (Brent Blend) in USD per barrelFutures prices (broken lines) International commodity prices1) Index. Week 1 2002 = 100 Week 1 2002 – week 38 2008 20.06.08 (MPR 2/08) 22.09.08 1) In XDR Sources: Thomson Reuters and Norges Bank

  13. Consumer prices abroad12-month change. Per cent. January 2002 – August 2008 Russia Brazil US Sweden UK India1) China Japan Euro area 1) Wholesale prices Source: Thomson Reuters

  14. 22 September 2008 Market after MPR 2/08 (25 June) Policy rates and estimated forward rates Per cent. 2 January 2005 – 22 September 2008 UK Euro area US Sweden Sources: Thomson Reuters and Norges Bank

  15. Consumer prices12-month change. Per cent. January 2002 – July 2008 CPI CPIXE1) 15 1)CPIXE: CPI adjusted for tax changes and excluding temporary changes in energy prices Sources: Statistics Norway and Norges Bank

  16. Mainland GDP – half-year figuresChange from previous half year. Per cent. Annual rate. 2005 Q1 – 2008 Q2 MPR 2/08 Sources: Statistics Norway and Norges Bank

  17. Hourly productivity, mainland Norway4-quarter change. 5-quarter moving average. Per cent. 1997 Q1 – 2008 Q2 Average 1997 Q1 – 2008 Q2 Sources: Statistics Norway and Norges Bank

  18. Fixed investment in oil extraction and pipeline transport NOK billion. Seasonally adjusted figures. 2002 Q1 – 2008 Q2 18 Source: Statistics Norway

  19. Norges Bank's regional network: capacity constraints Per cent. January 2005 – August 2008 Capacity1) 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

  20. Expected change in selling prices over the next 12 months. Diffusion index¹) Retail trade and services to the household sector Manufacturing, building and construction and corporate services Source: Norges Bank 1) Share reporting higher prices + (0.5 * share reporting unchanged prices)

  21. Retail trade componentsJanuary 2004 = 100. Volume. Seasonally adjusted. January 2004 – July 2008 Other goods Sale of motor vehicles and automotive fuel Total Food, beverages and tobacco Electricity and fuel Sources: Statistics Norway and Norges Bank

  22. Unemployed Percentage of labour force. Seasonally adjusted. January 1998 – August 2008 Registered unemployed and on labour market programmes LFS unemployment Registered unemployed Sources: Statistics Norway, Norwegian Labour and Welfare Administration (NAV) and Norges Bank

  23. EmploymentFigures from LFS and QNA. 1000 personsMonthly and quarterly figures. February 1998 – June 2008 QNA LFS Source: Statistics Norway

  24. Labour migration In thousands. January 2006 – August 2008 Registered work permits (UDI) Registered work permits – new EEA countries (UDI) Registered foreign employees from new EEA countries (SSU) Sources: Central Office – Foreign Tax Affairs (SSU), Norwegian Directorate of Immigration (UDI) and Norges Bank

  25. Labour migration 12-month change. January 2007 – August 2008 Registered work permits (UDI) Registered work permits – new EEA countries (UDI) Registered foreign employees from new EEA countries (SSU) Sources: Central Office – Foreign Tax Affairs (SSU), Norwegian Directorate of Immigration (UDI) and Norges Bank

  26. Housing investment and order reserves housing construction2000 Q1 – 2008 Q2 Housing investment1), (left-hand scale) Order reserves housing construction (volume2)), (right-hand scale) 1) Measured at constant 2005-prices, mill. NOK. Seasonally adjusted 2) Deflated by the building construction index Sources: Statistics Norway and Norges Bank

  27. Building starts In 1000 m2. Trend. January 2002 – July 2008 Other buildings Dwellings Source: Statistics Norway

  28. Property prices and creditGrowth from same month/half-year previous year. Per cent. Enterprises Households House prices Commercial property prices Credit Credit Sources: Norwegian Association of Real Estate Agents, Association of Real Estate Agency Firms, Finn.no, ECON Pöyry, Statistics Norway and Norges Bank

  29. More expensive financing Short-term financingDifference between money market rates and expected key policy rate in Norway. Percentage points. 5-day moving average. 2 July 2007 – 17 Sep. 2008 Long-term financingIndicative credit spreads for Norwegian bonds. 5 years to maturity. Difference to swap rates. Percentage points. Weekly figures. 2 July 2007 – 17 Sep. 2008 12-month rate Bank bonds Covered bonds 3-month rate Sources: Bloomberg, Thomson Reuters, DnB NOR Markets and Norges Bank

  30. Key policy rate, money market rate1) and banks’ lending rate on new loans2) Per cent. 1 July 2007 – 22 September 2008 Mortgage rate Money market rate Key policy rate 30 1) 3-month NIBOR. 2)Interest rates on new mortgage loans of 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

  31. Key policy rate in the baseline scenario and estimated forward rates Per cent. 2008 Q4 – 2010 Q4 Market after publication of MPR 2/08 (25 June) Baseline scenario MPR 2/08 Market 22 September 2008 Sources: Thomson Reuters and Norges Bank

  32. Key policy rate Strategy interval 2/08 MPR 2/08 1/08 3/07 2/07 1/07 3/06 2/06 1/06 3/05 2/05 1/05 3/04 32 Source: Norges Bank

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