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Executive Board meeting 24 January 2007

Executive Board meeting 24 January 2007. Growth forecasts Consensus Forecasts GDP. Percentage change from previous year. 2006. 2007. Source: Consensus Forecasts. House prices 1) and housing starts in the US Seasonally adjusted. 12-month change. 2) January 2003 – December 2006.

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Executive Board meeting 24 January 2007

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  1. Executive Board meeting24 January 2007

  2. Growth forecasts Consensus ForecastsGDP. Percentage change from previous year 2006 2007 Source: Consensus Forecasts

  3. House prices1) and housing starts in the US Seasonally adjusted. 12-month change.2) January 2003 – December 2006 New dwellings Existing dwellings Housing starts 1) Median price for dwellings 2) 3-month moving average Sources: Reuters EcoWin and Norges Bank

  4. Oil prices, futures prices and commodity prices1 January 2002 – 22 January 2007 Oil price Brent Blend and futures prices USD per barrel Commodity prices In USD. Indices, 1 January 2002 = 100 Copper 26 October IR 3/06 Zinc 22 January 2007 Nickel Aluminium Sources: Telerate, IPE, Reuters EcoWin and Norges Bank

  5. CPI/HICP core 12-month change. Per cent. January 1997 – December 2006 US2) Euro area1) UK1) Sweden1) Japan2) 1) HICP excl. energy, food, alcohol and tobacco 2) CPI excl. food and energy Sources: Reuters EcoWin, Eurostat and national statistical offices

  6. Equities Indices,1 January 2006 = 100. 1 January 2006 – 22 January 2007 Norway Euro area Emerging markets US Japan Sources: STOXX, S&P500, Nikkei, Oslo Stock Exchange and Reuters EcoWin

  7. 10-year yield in different countries Per cent. 1 January 2006 – 22 January 2007 US UK Norway Germany Sweden Sources: Reuters and Bloomberg

  8. Expected 5-year yield five years aheadPer cent. 2 January 2002 – 22 January 2007 Source: Norges Bank

  9. 22 January 2007 IR 3/06 (31 October) Key rates and forward rates IR 3/06 and 22 January 2007 UK Sweden Euro area US Sources: Reuters and Norges Bank

  10. 3-month interest rate differential and import-weighted exchange rate (I-44)1) January 2002 – December 2009 I-44 (right-hand scale) Average 1 – 22 January 2007 22 January 2007 31 October 2006 (IR 3/06) Weighted interest rate differential (left-hand scale) 1) A rising curve denotes an appreciation of the krone. Sources: Bloomberg and Norges Bank

  11. CPI and uncertainty interval for underlying inflation1) 12-month change. Per cent. January 2002 – December 2006 Highest indicator CPI Lowest indicator 1) Highest and lowest indicators of the CPI-ATE, the weighted median and the 20% trimmed mean Sources: Statistics Norway and Norges Bank

  12. CPI-ATE1)Total and by supplier sector2). 12-month change. Per cent. January 2002 – December 2006 Domestically produced goods and services (0.7) CPI-ATE Imported consumer goods (0.3) 1) CPI-ATE adjusted for the estimated effect of reduced maximum day-care rates from January 2006. 2) Norges Bank's estimates. Sources: Statistics Norway and Norges Bank

  13. UnemploymentLFS unemployment and registered unemployed. Seasonally adjusted. Per cent. February 1983 - December 2006 LFS unemployment Registered unemployed Sources: Statistics Norway and Norwegian Labour and Welfare Organisation (NAV)

  14. Employment (LFS)1)In 1000s. Seasonally adjusted. January 2005 – October 2006 1) The changes to the LFS resulted in a break in the time series between 2005 and 2006. Source: Statistics Norway

  15. Manufacturing output index Volume. Index. 3-month moving average. January 2001 – November 2006 Capital goods Intermediate goods Consumer goods Source: Statistics Norway

  16. Enterprise sector credit1) and liquid assets2)12-month growth. Per cent. January 2002 – November 2006 (C3 to October) Money supply (M2) Total credit (C3) 1) Mainland non-financial enterprises (C3). 2) Non-financial enterprises' liquid assets (M2). Source: Statistics Norway

  17. Index of commodity consumption Volume. Seasonally adjusted. Index, 1995 = 100. January 2004 – November 2006 Sources: Statistics Norway and Norges Bank

  18. House prices and household debt12-month change. Per cent. January 2001 – December 2006 (C2 to November) House prices Household debt (C2) Sources: Norwegian Assoc. of Real Estate Agents, Assoc. of Real Estate Agency Firms, Finn.no, ECON and Norges Bank

  19. Construction cost index for residential buildings12-month rise. Per cent. January 2001 – December 2006 Source: Statistics Norway

  20. Sight deposit rate in baseline scenario and estimated forward rates1)Per cent. At 22 January 2007 Baseline scenario IR 3/06 Market 22 January 2007 Market before IR 3/06 (31 October) 1) In the calculation, a credit risk premium and a technical difference of 0.20 percentage point have been deducted to make the forward rates comparable with the sight deposit rate. Sources: Reuters and Norges Bank

  21. Monetary Policy Strategy - Inflation Report 3/06 • The Executive Board’s assessment is that the sight deposit rate should be in the interval 3¼ - 4¼ per cent in the period to the publication of the next Inflation Report on 15 March 2007, conditional on economic developments that are broadly in line with the projections. • The interest rate may gradually be raised to a more normal level at a somewhat faster pace than envisaged earlier, although it is unlikely that rates will be raised at every monetary policy meeting. In the light of our current assessment, the interest rate will thus continue to be raised in small, not too frequent steps.

  22. Baseline scenario in Inflation Report 3/06 Import-weighted exchange rate Sight deposit rate CPI-ATE Output gap Sources: Statistics Norway and Norges Bank

  23. Executive Board meeting24 January 2007

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