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Executive Board meeting 26 April 2006

Executive Board meeting 26 April 2006. Monetary Policy Strategy - Inflation Report 1/06.

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Executive Board meeting 26 April 2006

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  1. Executive Board meeting26 April 2006

  2. Monetary Policy Strategy - Inflation Report 1/06 • The Executive Board's assessment is that the sight deposit rate should be in the interval 2¼ - 3¼ per cent in the period to the publication of the next Inflation Report on 29 June 2005, conditional on economic developments that are broadly in line with the projections. • The interest rate may gradually – in small, not too frequent steps – be brought back towards a more normal level. The objective of bringing inflation back to target and anchoring inflation expectations nevertheless implies that monetary policy remains expansionary.

  3. Growth projections for 2006 and 2007Projections for GDP growth published by the IMF in September 2005 and April 2006. Per cent Source: IMF World Economic Outlook April 2006

  4. Developments on stock markets internationally 2 January 2002 = 100. 2 January 2002 – 24 April 2006 Source: EcoWin

  5. Oil price Brent Blend and futures prices USD per barrel. 3 January 2002 – 24 April 2006 24 April 2006 10 March IR 1/06 Sources: Norges Bank and EcoWin

  6. Oil futures pricesUSD per barrel light crude. 3 January 2004 – 24 April 2006 Delivery in 1 month Delivery in 6 years Sources: EcoWin/ NYMEX

  7. Metal pricesIndex. Week 1, 2001 = 100 USD USD Copper Nickel Steel Zinc Aluminium Source: EcoWin

  8. Core inflation1)12-month change. January 2002 – March 2006 US Euro area UK Sweden Japan 1) US: CPI excl. food and energy, Japan: CPI excl. fresh food Euro area, UK and Sweden: CPI excl. energy, food, alcohol and tobacco Source: EcoWin\Eurostat

  9. 24 April 2006 15 March 2006 Actual and expected key rates1) UK Sweden Euro area US 1) Not adjusted for credit risk Sources: Reuters and Norges Bank

  10. Yields on 10-year government bonds 2 January 2004 – 25 April 2006 Norway US Germany Japan Sources: EcoWin and Norges Bank

  11. 3-month interest rate differential and import-weighted exchange rate (I-44) 1) January 2002 – December 2009 I-44, (right-hand scale) Average 3 - 25 April Weighted 3-month interest rate differential (left-hand scale) 15 March 2006 24 April 2006 1) A rising curve denotes an appreciation of the krone. Sources: Bloomberg and Norges Bank

  12. Inflation12-month change. Per cent. January 2002 - March 2006 Weighted median CPI CPI-ATE1) 1)A further adjustment is made for the estimated effect of reduced maximum day-care rates from January 2006. Sources: Statistics Norway and Norges Bank

  13. CPI-ATE 1)Total and by supplier sector2). Actual inflation and projections from IR 1/06 12-month change. Per cent. January 2004 - May 2006 Goods and services produced in Norway CPI-ATE Imported consumer goods 1)A further adjustment is made for the estimated effect of reduced maximum day-care rates from January 2006. 2) Norges Bank's calculations Sources: Statistics Norway and Norges Bank

  14. Change in prices for food and non-alcoholic beveragesExcluding taxes.12-month change. Per cent. January 2004 – March 2006 Source: Statistics Norway

  15. Mainland GDP, excluding energyPercentage growth in volume on previous quarter. Seasonally adjusted Basis value. 2000 Q1 - 2005 Q4 Sources: Statistics Norway and Norges Bank

  16. Number of unemployed (LFS), registered unemployed and persons on labour market programmes 
In thousands. Seasonally adjusted. January 1996 – March 2006 Registered unemployed and on labour market programmes LFS unemployment Registered unemployed Sources: Statistics Norway and the Directorate of Labour

  17. Expected earnings in listed companiesIndex. 01.01.2006 = 100 2006 2007 US US Japan Japan Europe Europe Norway Norway Sources: Reuters and EcoWin

  18. House prices (12-month change)and housing starts(number of 1000s in last 12-months). January 2001 – March 2006 Housing starts House prices Sources: Statistics Norway, Norwegian Association of Real Estate Agents (NEF), Association of Real Estate Agency Firms (EFF), ECON and Finn.no

  19. Credit growthTotal debt mainland Norway (C3). Domestic credit to households (C2) 12-month growth. Per cent Total debt of mainland enterprises Households Total debt Source: Norges Bank

  20. Sight deposit rate in baseline scenario and market expectations regarding the sight deposit rate1)Per cent. 2006 Q2 – 2009 Q4 Baseline scenario Market 24 April 2006 Market expectations concerning the sight deposit rate 1) Derived from estimated forward rates. The sight deposit rate has been reduced by a credit risk premium and technical difference of 0.20 percentage point. The grey shaded interval shows the highest and lowest interest rates in the market's sight deposit rate scenario in the period 6 – 24 April. 06 Source: Norges Bank

  21. 30% 50% 70% 90% Sight deposit rate in baseline scenario from Inflation Report 1/06 with fan chartPer cent. Quarterly figures. 2004 Q1– 2009 Q4 Source: Norges Bank

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