Norges Bank Executive Board meeting 16 August 2006

Norges Bank Executive Board meeting 16 August 2006 1

Norges Bank GDP growth among trading partners (1) Seasonally adjusted volume growth on previous quarter. Per cent. 2002 Q 1 – 2006 Q 2 US Japan Euro area Sources: Eco. Win / National statistical offices and Norges Bank 2

Norges Bank GDP growth among trading partners (2) Seasonally adjusted volume growth on previous quarter. Per cent. 2002 Q 1 – 2006 Q 2 Sweden UK 18 Trading partners Sources: Eco. Win / National statistical offices and Norges Bank 3

Norges Bank Equities and metals Indices. 1 January 2006 = 100. Daily figures. 1 January – 14 August 2006 Equities Metals Nickel Zinc Euro area Norway Copper Aluminium US Japan Sources: STOXX, S&P 500, Nikkei, Oslo Stock Exchange, FTSE and Eco. Win 4

Norges Bank CPI/HICP 12 -month change. January 1997 – July 2006 US Euro area UK Japan Source: Eco. Win / National statistics 5

Norges Bank CPI/HICP core 12 -month change. January 1997 – July 2006 US 2) Euro area 1) UK 1) Japan 3) 1) HICP excl. energy, food, alcohol and tobacco 2) CPI excl. food and energy 3) CPI excl. fresh food Source: Eco. Win / National statistics 6

Norges Bank Actual and expected key rates as per IR 2/06 and 14 August 2006 UK Norway Sweden Euro area US 14 August 2006 IR 2/06 (28 June) Sources: Reuters and Norges Bank 7

Norges Bank Oil price Brent Blend and futures prices Daily figures. USD per barrel. 1 January 2002 – 14 August 2006 22 June IR 2/06 Sources: Telerate, IPE and Norges Bank 8

Norges Bank Oil production in Iraq, Russia, Nigeria and Venezuela Million barrels per day. Monthly figures. January 2001– July 2006 Nigeria (right-hand scale) Russia (left-hand scale) Venezuela (right -hand scale) Iraq (right -hand scale) Source: International Energy Agency 9

Norges Bank Electricity price NOK/MWh. Nord Pool January 2002 – July 2006. Futures prices. 2006 Q 3 – 2008 Q 4 15 August 2006 22 June 2006 Sources: Nord Pool and Norges Bank 10

Norges Bank 3 -month interest rate differential and import-weighted exchange rate (I-44)1) January 2002 – December 2009 I-44 (left-hand scale) 14 August 06 Weighted interest rate differential (right-hand scale) 1) A rising curve denotes an appreciation of the krone. 28 June 06 (IR 2/06) Sources: Bloomberg and Norges Bank 11

Norges Bank Different indicators of inflation 12 -month rise. Per cent. January 2002 – July 2006 CPI Weighted median 20 per cent trimmed mean CPI-ATE 1) 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. Source: Statistics Norway 12

Norges Bank CPI-ATE 1) Total and by supplier sector 2). Actual inflation and projections from IR 2/06. 12 -month rise. Per cent. July 2003 - July 2006 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 13

Norges Bank Unemployed In thousands. Seasonally adjusted. January 2001 – July 2006 Registered unemployed and on labour market programmes LFS unemployment 1) Registered unemployed 1)The restructuring of the LFS has resulted in a break in the time series between 2005 and 2006 Sources: Statistics Norway and the new Labour and Welfare Service (NAV) 14

Norges Bank Credit growth Total credit, mainland Norway and enterprises (C 3). Domestic credit to households (C 2). 12 -month change. Per cent Total enterprise sector credit Households Total credit Source: Norges Bank 15

Norges Bank Housing market January 2001 – July 2006 Housing starts (number of 1000 s in the last 12 months) House prices (NEF) (12 -month rise. Per cent) Sources: Statistics Norway, Norwegian Association of Real Estate Agents (NEF), Association of Real 16 Estate Agency Firms (EFF), ECON and Finn. no

Norges Bank Business tendency survey Indicator of resource shortages. Smoothed. Per cent. 1983 Q 1 – 2006 Q 2 Source: Statistics Norway 17

Norges Bank Sight deposit rate in the baseline scenario and market expectations concerning the sight deposit rate 1) Per cent. 2006 Q 3 – 2009 Q 4 Baseline scenario IR 2/06 Market expectations concerning the sight deposit rate Market IR 2/06 Market 14 August 2006 1) Derived from estimated forward rates. A credit risk premium and a 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 1 – 14 Aug 06 Source: Norges Bank 18

Norges Bank Sight deposit rate in baseline scenario with fan chart Per cent. 2004 Q 1 – 2009 Q 4 30% 50% 70% 90% Source: Norges Bank 19

Norges Bank Monetary Policy Strategy - Inflation Report 2/06 • The Executive Board's assessment is that the sight deposit rate should be in the interval 2¾ - 3¾ per cent in the period to the publication of the next Inflation Report on 1 November 2006, conditional on economic developments that are broadly in line with projections. • The interest rate may gradually – in small, not too frequent steps – be brought back towards a more normal level. 20