Norges Bank

1

Executive Board Meeting30 June 2005

Norges Bank

2

Estimated GDP growth in 2005 among Norway's trading partners. Per cent

0

1

2

3

4

US Japan Euro area Sweden HP 25

IR 1/05

IR 2/05

Source: Norges Bank

Norges Bank

3

CPI/HICP (core) in the US, the euro area, Japan and China1)

Percentage change on same month previous year

-2

0

2

4

6

2000 2001 2002 2003 2004 2005

-2

0

2

4

6

Source: EcoWin / National statistics

USEuro area

Japan1) CPI

China

Norges Bank

4

Consumer prices in the Nordic countriesPercentage rise on same month previous year

-1

0

1

2

3

4

5

2002 2003 2004 2005

-1

0

1

2

3

4

5

Source: EcoWin / National statistics

Norway(CPI-ATE)

Sweden(UND1X)

Denmark*

* CPI excl. energy, food, alcohol and tobacco

Finland*

Norges Bank

5

Indicator of external price impulses to imported consumer goods measured in foreign currency

Annual figures. Per cent. 1995 – 20081)

-3

-2

-1

0

1

2

-3

-2

-1

0

1

2

1995 1998 2001 2004 2007

1) Projections for 2005 -2008

Source: Norges Bank

Norges Bank

6

Developments in 10-year government bond yields

2

3

4

5

6

Jan 04 May 04 Sep 04 Jan 05 May 05

2

3

4

5

6

Source: EcoWin

NorwayUS

Germany

Norges Bank

7

Interest rate expectations for the US, the euro area and Sweden

0

0.5

1

1.5

2

2.5

3

3.5

4

Jun 03 Dec 03 Jun 04 Dec 04 Jun 05 Dec 05 Jun 06 Dec 06

0

0.5

1

1.5

2

2.5

3

3.5

4

Sources: Reuters and Norges Bank

US

Euro area

28 June

24 May

Sweden

Norges Bank

8

15

20

25

30

35

40

45

50

55

60

65

2002 2003 2004 2005 2006 2007 2008

15

20

25

30

35

40

45

50

55

60

65

Oil price Brent Blend and futures prices Daily figures, USD per barrel. January 2002 - June 2005

10 March (IR 1/05)

Sources: Telerate, IPE and Norges Bank

28 June

24 June (IR 2/04)

24 May

Norges Bank

9

Oil futures pricesUSD per barrel light crude. Daily figures. January 2001 – June 2005

15

20

25

30

35

40

45

50

55

60

65

2001 2002 2003 2004 200515

20

25

30

35

40

45

50

55

60

65

Delivery in 6-7 years

Delivery in 1 month

Source: EcoWin/ NYMEX

Norges Bank

10

-5

-4

-3

-2

-1

0

1

2

3

4

Jul 03 Oct 03 Jan 04 Apr 04 Jul 04 Oct 04 Jan 05 Apr 05

-5

-4

-3

-2

-1

0

1

2

3

4

CPI-ATE. Total and distributed by imported and domestically produced goods and services

Historical and projections IR 1/05 (broken lines). 12-month change. Per cent

Sources: Statistics Norway and Norges Bank

Goods and services produced in Norway (0.7)

Imported consumer goods (0.3)

CPI-ATE

Norges Bank

11

3-month interest rate differential and import-weighted exchange rate (I-44)

A fall in value denotes a depreciating currency. Daily figures

-1

0

1

2

3

4

5

2002 2003 2004 2005 2006

85

88

91

94

97

100

103

Sources: Norges Bank and Bloomberg

I-44 (right-hand scale)

Weighted 3-month interest rate differential

(left-hand scale)

24 May 05

28 June 05

Norges Bank

12Sources: Norges Bank and EcoWin

I-44, interest rate differential (3-month) and expected interest rate differential (12-month) 1 year ahead

90

92

94

96

98

100

Jan 04 Apr 04 Jul 04 Oct 04 Jan 05 Apr 05

-0.9

-0.6

-0.3

0.0

0.3

0.6

I-441) (left-hand scale)

Expected 1-year interest rate differential 1 year ahead (euro, USD, SEK, GBP)

3-month interest rate differential against trading

partners (9 currencies) (right-hand scale)

1) A rising curve denotes an appreciating currency

Norges Bank

13

3-month money market rate and I-441) in scenario with stronger exchange rate (IR 1/05)

Quarterly figures. 2001 Q1 – 2008 Q4

0

1

2

3

4

5

6

2004 2005 2006 2007 2008

88

90

92

94

96

98

100

I-44 in scenario with stronger exchange rate

(right-hand scale)

Interest rate in baseline scenario (left-hand scale)

Interest rate in scenario with stronger exchange rate (left-hand scale)

I-44 29 June 2005

1) The figure for 2005 Q2 are based on the average through 29 June

Source: Norges Bank

Norges Bank

14

Interest rate expectations Norway

0

1

2

3

4

5

6

Jun 03 Dec 03 Jun 04 Dec 04 Jun 05 Dec 05 Jun 06

0

1

2

3

4

5

6

Sources: Norges Bank and Reuters

24 May

28 June

Norges Bank

15

Summary from regional networkRound 3 2005

• Demand is growing in all sectors at approximately the same pace as in the last round. The same growth rate is expected in the period ahead. Lowered expectations in the export and building and construction industries

• Approximately 40% of our contacts have some or considerable problems in meeting growth in demand. Building and construction and parts of petroleum-related industry have reached capacity

• Plans for a moderate increase in investment, as in previous round.

• Expect moderate growth in employment in all industries apart from the public sector

• In the future more people expect higher inflation than expect lower inflation, but the number expecting higher inflation is lower than earlier in 2005.

• Profitability is still increasing throughout the private sector, primarily among suppliers to the petroleum industry.

Norges Bank

16

Employment and man-hours worked Seasonally adjusted. Index 1996 Q1=100. Quarterly figures

1996 Q1 – 2005 Q1

98

100

102

104

106

108

110

1996 1998 2000 2002 2004

98

100

102

104

106

108

110

Sources: Statistics Norway and Norges Bank

Number employed

Man-hours

Norges Bank

17

Unemployed. LFS unemployment, registered unemployed and persons on labour market programmes

In thousands. Seasonally adjusted. Monthly figures, Jan 2001 – May 2005

50

75

100

125

2000 2001 2002 2003 2004 2005

50

75

100

125

Sources: Statistics Norway and the Directorate of Labour

Registered unemployed and on labour market programmes

LFS unemployment

Registered unemployed

Norges Bank

18

Investment intentions survey. Oil and gas recovery incl. pipeline transport.

Estimated and actual investment. In billions of NOK

0

20

40

60

80

May Aug Nov Feb May Aug Nov Actual

0

20

40

60

80

2002

2003

2005

2004

Estimate published previous year Estimate published same year

Source: Statistics Norway

Final figures

2006

Norges Bank

19

House prices from the real estate businessAnnualised 3-month centred moving change. Seasonally adjusted

figures. Per cent

-10

-5

0

5

10

15

20

25

Jan 02 Jul 02 Jan 03 Jul 03 Jan 04 Jul 04 Jan 05

-10

-5

0

5

10

15

20

25

Sources: Associations of Norwegian real estate agents (NEF, EFF) and Norges Bank

Norges Bank

20

Developments in banks' interest marginsPer cent

-1

0

1

2

3

4

5

1998 1999 2000 2001 2002 2003 2004 2005

-1

0

1

2

3

4

5

Source: Norges Bank

Interest margin, total

Lending margin

Deposit margin

Norges Bank

21

3-month money-market rate and import-weighted exchange rate (I-44)1) 2) in the baseline scenario.

Quarterly figures. 2004 Q1 – 2008 Q4

0

1

2

3

4

5

6

2004 2005 2006 2007 2008

88

90

92

94

96

98

100

IR 2/05Import-weight krone exchange rate I-44 (right-hand scale)

1)A rising curve denotes a weaker krone exchange rate. Reflects the forward rate on 24 June2) The figures for 2005 Q2 are based on the average through 24 June

Source: Norges Bank

Interest rate (left-hand scale)

IR 2/05

IR 1/05

IR 1/05

Norges Bank

22

Projections for the CPI-ATE and output gap in the baseline scenario. Quarterly figures. Per cent. 04 Q1 – 08 Q4

-2

-1

0

1

2

3

2004 2005 2006 2007 2008

-2

-1

0

1

2

3

Sources: Statistics Norway and Norges Bank

CPI-ATE

Output gap