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Executive Board meeting 31 May 2006

Executive Board meeting 31 May 2006. Growth forecasts Consensus Forecasts Forecasts for GDP growth published at different times. Per cent. 2006. 2007. Source: Consensus Forecasts. Equities and commodities Indices, 1 January 2006 = 100. Daily figures. 1 January – 29 May 2006. Equities.

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Executive Board meeting 31 May 2006

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  1. Executive Board meeting31 May 2006

  2. Growth forecasts Consensus ForecastsForecasts for GDP growth published at different times. Per cent 2006 2007 Source: Consensus Forecasts

  3. Equities and commoditiesIndices, 1 January 2006 = 100. Daily figures. 1 January – 29 May 2006 Equities Commodities Metals IR1/06 IR1/06 Norway Gold Emerging markets EUR Oil US Japan Sources: STOXX, S&P500, Nikkei, Oslo Stock Exchange, FTSE and EcoWin

  4. Metal pricesUSD.Indices, 1 Jan 2001 = 100. Daily figures. 1 Jan 2001 - 26 May 2006 Copper Nickel Aluminium Zinc Source: EcoWin

  5. Spread between US government bonds and government bonds of emerging economies1)Basis points. 1.1.2000 – 29.5.2006 Year to date 1) JP Morgan Emerging Markets Bond Index (EMBI). The series includes Argentina, Brazil, Bulgaria, Ecuador, Mexico, Panama, Peru, Poland, Russia and Venezuela. Source: EcoWin

  6. Consumer prices (CPI/HICP)12-month change. January 1997 – April 2006. Per cent US Euro area UK Japan Source: EcoWin/National statistics

  7. Core inflationCPI/HICP-core. 12-month change. January 1997 - April 2006. Per cent US Euro area UK Japan 1) US: CPI excl. food and energy, Japan: CPI excl. fresh food Euro area and UK : CPI excl. energy, food, alcohol and tobacco Source: EcoWin/National statistics

  8. 29 May 2006 24 April 2006 Actual and expected key rates1) UK Norway Sweden Euro area US 1) Not adjusted for credit risk Sources: Reuters and Norges Bank

  9. Oil price Brent Blend and futures prices USD per barrel. Daily figures. January 02 – December 08 24 April 2006 26 May 2006 Sources: Norges Bank and EcoWin

  10. IEA forecasts for growth in oil demand and output in 2006 Changes in million barrels per day on previous year Global demand growth Non-OPEC output growth Time of forecast Source: International Energy Agency

  11. 3-month interest rate differential and import-weighted exchange rate (I-44) 1). January 2002 – December 2009 I-44, (right-hand scale) Average 2 - 30 May Weighted 3-month interest rate differential (left-hand scale) 29 May 2006 15 March 2006 24 April 2006 1) A rising curve denotes an appreciation of the krone. Sources: Bloomberg and Norges Bank

  12. Various inflation indicators12-month change. January 2002 – April 2006. Per cent CPI Weighted median 20 per cent trimmed mean CPI-ATE1) 1) Adjusted for the estimated effect of reduced maximum day-care rates from January 2006. Sources: Statistics Norway and Norges Bank

  13. CPI-ATE1)Total and broken down into imported and domestically produced goods and services2) Historical inflation and projections IR 1/06 (broken line). 12-month change. Per cent Goods and services produced in Norway (0.7) CPI-ATE Imported consumer goods (0.3) 1) CPI-ATE: CPI adjusted for tax changes and excluding energy products. 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. Number of unemployedLFS, registered unemployed and persons on labour market programmes. In thousands. Seasonally adjusted Registered unemployed and on labour market programmes LFS unemployment Registered unemployed Sources: Statistics Norway and the Directorate of Labour

  15. Business tendency survey Indicator of resource shortages. Smoothed. Per cent. 83 Q1 – 06 Q1 Source: Statistics Norway

  16. New orders construction Trend. Value index, 2000 = 100. 2002 Q1 - 2006 Q1 Construction Dwellings Other buildings Source: Statistics Norway

  17. Credit growthTotal credit, mainland Norway (C3). Domestic credit to households (C2). 12-month growth. Per cent Total enterprise sector credit Households Total credit Source: Norges Bank

  18. Sight deposit rate in baseline scenario and market expectations regarding the sight deposit rate1)Per cent. 06 Q2 – 09 Q4 Baseline scenario IR 1/06 Market 29 May 2006 1) Derived from estimated forward rates. A credit risk premium and technical difference of 0.20 percentage point were deducted in calculating the sight deposit rate. The grey shaded interval shows the highest and lowest interest rates in the market's sight deposit rate scenario in the period 12 – 29 May 06. Source: Norges Bank

  19. 30% 50% 70% 90% Sight deposit rate in baseline scenario from Inflation Report 1/06 with fan chartPer cent. Quarterly figures. 04 Q1– 09 Q4 Source: Norges Bank

  20. 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, 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.

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