Lysbilde 1 - Norges Bank

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Lysbilde 1 - Norges Bank
Inflation Report 1/2005
Main features of the
economic outlook
Chart 1 Projections and uncertainty for CPI-ATE.1)
4-quarter change. Per cent. 01 Q1 – 08 Q4
5
5
30% 50% 70% 90%
4
4
3
3
2
2
1
1
0
2001 2002 2003 2004 2005 2006 2007 2008
0
1) The
bands in the fan indicate different probabilities for
developments in the CPI-ATE. Probabilities are based on the
difference between projected and actual developments in
underlying inflation in the period 1997 – 2004
Sources: Statistics Norway and Norges Bank
Chart 2 Projections and uncertainty for growth in
mainland GDP.1) Annual change. Per cent.
2001 – 2008
6
6
30% 50% 70% 90%
5
5
4
4
3
3
2
2
1
1
0
0
2001 2002 2003 2004 2005 2006 2007 2008
1) The
bands in the fan indicate different probabilities for growth
in mainland GDP. Probabilities are based on the difference
between projected and actual developments in mainland GDP
in the period 1994 -2003
Sources: Statistics Norway and Norges Bank
Section 1
Chart 1.1 Interest rate expectations. Actual
developments and expected key rate1) at 10
March 05. Per cent. 2 Jan 03 – 1 Nov 06
6
6
UK
5
5
4
3
2
4
2
Euro area
US
1
0
2003
3
Norway
1
0
2004
2005
1) FRAs
2006
and futures contracts adjusted for the estimated difference
between 3-month money market rates and the key rate
Sources: Reuters and Norges Bank
Chart 1.2 Forward interest rates1) 2). Monthly
figures. Per cent. Jan 02 – Dec 08
10
8
3-month money
market rate
8
6
6
Forward rate 28 October 04
(IR 3/04)
4
2
0
2002
10
Forward rate 10 March 05
4
2
0
2004
1) The
2006
2008
money market rate is normally about ¼ percentage point higher
than the sight deposit rate
2) 3-month money market rates to end-February 2005
Source: Norges Bank
Chart 1.3 Forward interest rates. Monthly figures.
Per cent. Oct 04 – Dec 08
6
6
Norway
5
5
4
4
3
3
Trading partners1)
2
1
0
2004
1) Estimated
10 March 05
28 October 04
2
1
0
2005
2006
2007
2008
as a weighted average of trading partners' forward rates
Source: Norges Bank
Chart 1.4 Nominal effective exchange rate1).
Import-weighted exchange rate index (I-44,
1995=100) and the trade-weighted exchange rate
index (TWI, 1990=100). Monthly figures.
Jan 90 – Feb 05
120
120
TWI
110
110
100
100
90
I-44
80
90
80
90 92 94 96 98 00 02 04
1)A rising
curve denotes a weaker krone exchange rate
Source: Norges Bank
Chart 1.5 Real exchange rates (relative consumer
prices and labour costs in common currency). Annual
figures. Per cent.
Deviation from average 1970 – 20041)
15
15
10
10
5
Relative prices3)
5
0
0
-5
-5
-10
Relative labour costs
in manufacturing2)
-15
-10
-15
85 87 89 91 93 95 97 99 01 03 05
1) Average
nominal exchange rate (TWI) for 2005 based on the
average so far this year (through 10 March)
2) Projections for wage growth in 2005 from IR 1/05
3) Projections for consumer price inflation in 2005 from IR 1/05
Sources: Statistics Norway, TRCIS, the Ministry of Finance
and Norges Bank
Chart 1.6 Value added, mainland Norway.
Index. 2001 = 100. Seasonally adjusted.
Quarterly figures. 99 Q1 – 04 Q4
112
Services1)
106
100
112
106
100
Goods
94
94
Mainland Norway
88
1999
1) Excluding
2001
public sector
Source: Statistics Norway
2003
88
2005
Chart 1.7 Output, employment and productivity.
Average quarterly growth (annualised) up to 04 Q4.
Per cent
5
5
Last 7 quarters
4
4
Last 4 quarters
3
3
2
2
1
1
0
0
Mainland
GDP
Employed
persons
Personhours
worked
Productivity
Sources: Statistics Norway and Norges Bank
Chart 1.8 Number of sick pay days paid by the
National Insurance per employee.1) Per cent. Annual
figures. 1980 – 2004
14
14
12
12
10
10
8
8
6
6
4
4
1980 1984 1988 1992 1996 2000 2004
1) Since
2000 the sick pay scheme has also applied to all
central government employees. This results in a break in the
series between 1999 and 2000
Source: National Insurance Administration
Chart 1.9 Person-days lost due to sickness absence,
both self-certified and doctor-certified, for employees
aged 16-69. Per cent of contractual person-days.
Quarterly figures. 00 Q2 – 04 Q3
9
9
8
8
7
7
6
6
5
5
4
2000
4
2001
2002
Source: Statistics Norway
2003
2004
Chart 1.10 Demand. Average quarterly growth
(annualised) through 04 Q4. Per cent
24
20
24
Last 7 quarters
20
Last 4 quarters
16
16
12
12
8
8
4
4
0
0
Priv.
cons.
Publ.
cons.
Mainl.
invest.
Petr. Exp. trad.
invest.
goods
Sources: Statistics Norway and Norges Bank
Chart 1.11 Housing investment and housing starts.
Seasonally adjusted. 00 Q1 – 04 Q4
16,000
Housing starts, in 1000 m2
(right-hand scale)
15,000
1000
900
800
14,000
700
13,000
Housing investment,
in millions of 2002-NOK
(left-hand scale)
600
12,000
500
2000 2001 2002 2003 2004 2005
Sources: Statistics Norway and Norges Bank
Chart 1.12 Growth in credit to households and
enterprises.1) 12-month growth. Per cent.
Jan 97 – Jan 05
18
18
15
15
Credit to
households
12
12
9
9
6
6
Credit to non-financial
enterprises
3
3
0
0
-3
1997
-3
1)
1999
2001
From domestic sources (C2)
Source: Norges Bank
2003
2005
Chart 1.13 Mainland fixed investment.
Average quarterly growth (annualised) through
04 Q4. Per cent
28
Last 7 quarters
24
Last 4 quarters
28
24
20
20
16
16
12
12
8
8
4
4
0
0
Goods
production
1)
Services1)
Housing
Excluding public sector
Sources: Statistics Norway and Norges Bank
Chart 1.14 Vacant office premises in Oslo, Asker
and Bærum. Per cent of total property stock.
Annual figures. 1991 – 20051)
12
12
10
10
8
8
6
6
4
4
2
2
0
0
1991
1) As
1994
1997
at February
Source: Eiendomsspar AS
2000
2003
Chart 1.15 CPI-ATE1). Total and by supplier sector.2)
12-month change. Per cent. Jan 02 – Feb 05
6
6
Goods and services produced in Norway
4
2
4
2
CPI-ATE
0
0
-2
-2
-4
Actual
IR 3/04
Imported consumer goods
-6
2002
1) CPI-ATE:
2003
2004
2005
CPI adjusted for tax changes and excluding energy
products
2) Norges Bank's estimates
Sources: Statistics Norway and Norges Bank
-4
-6
Chart 1.16 Contribution to the decline in the
CPI-ATE inflation from Dec 01. Percentage
points. Jan 02 – Feb 05
0.5
0.5
0.0
0.0
Imported consumer goods
-0.5
-0.5
-1.0
-1.0
-1.5
-1.5
-2.0
House rents
-2.0
-2.5
Other services
-2.5
-3.0
2002
Remainder1)
2003
-3.0
2004
1) Agricultural
2005
products, fish products, consumer goods
produced in Norway, services with wages as dominant factor
Sources: Statistics Norway and Norges Bank
Chart 1.17 CPI-ATE. Seasonally adjusted monthly
change. 3-month moving average, annualised.
Per cent. Jan 04 – Jun 051)
3
3
Historical
Projections
2
2
1
1
0
0
-1
-1
Jan 04 Apr 04 Jul 04 Oct 04 Jan 05 Apr 05
1) Projections
from Mar 05 – Jun 05
Sources: Statistics Norway and Norges Bank
Chart 1.18 The output gap1) and CPI-ATE.
Quarterly figures. Per cent. 99 Q1 – 05 Q32)
4
4
2
CPI-ATE
0
2
0
Output gap
-2
1999
-2
2001
2003
2005
Quarterly figures for the output gap have been derived from annual
figures.
2) Projections for 2005
1)
Sources: Statistics Norway and Norges Bank
Section 2
Chart 2.1 Chinese imports of crude oil and oil
prices. Monthly imports in millions of tons. Oil
price, USD/barrel. 6-month moving average.
Apr 94 – Dec 04
50
15
40
12
30
Oil price (left-hand scale)
20
10
9
6
Chinese imports of
crude oil
(right-hand scale)
0
1994 1996 1998 2000 2002 2004
Sources: EcoWin / National Bureau of Statistics and
Norges Bank
3
0
Chart 2.2 Chinese imports of aluminium and
aluminium prices. Monthly imports in thousands of
tons. Aluminium price in USD/ton.
6-month moving average. Apr 94 – Dec 04
3000
Chinese imports of aluminium
(right-hand scale)
160
2500
120
2000
80
1500
40
Aluminium spot price
(left-hand scale)
1000
1994 1996 1998 2000 2002 2004
Sources: EcoWin / National Bureau of Statistics
and Norges Bank
0
Chart 2.3 Oil price1) in USD per barrel. Forward
prices from 28 Oct 04 and 10 Mar 05.
Daily figures. 2 Jan 02 – 31 Dec 07
55
55
10 March 05
45
45
28 October 04
IR 3-04
35
25
25
15
2002
1) Brent
35
2004
2006
Blend
Sources: Telerate, IPE and Norges Bank
15
2008
Chart 2.4 Crude oil stocks in the US. In million
barrels. Weekly figures. Jan 03 – Mar 05
325
325
2004
300
2005
300
2003
275
275
250
250
Jan
Mar
May
Jul
Sep
Source: Energy Information Agency
Nov
Chart 2.5 Oil price futures. USD per barrel of light
crude. Monthly figures. Jan 01 – Mar 051)
55
55
50
50
45
45
40
40
Delivery next month
35
35
30
30
25
25
Delivery in 6-7 years
20
15
20
15
2001
2002
2003
2004
1) The
2005
figure for March is the average up to and including
the 10th
Sources: EcoWin/NYMEX and Norges Bank
Chart 2.6 Producer prices among trading partners.
4-quarter change. Per cent. 98 Q1 – 04 Q4
6
6
3
3
0
0
-3
1998
-3
2000
2002
2004
Sources: National statistical offices and Norges Bank
Chart 2.7 Indicator of external price impulses to
imported consumer goods measured in foreign
currency. Annual figures. Per cent.1995 – 20081)
3
3
2
2
1
1
0
0
-1
-1
-2
-2
-3
-3
1995 1997 1999 2001 2003 2005 2007
1) Projections
for 2005 -2008
Source: Norges Bank
Chart 2.8 Investment intentions survey. Oil and
gas recovery incl. pipeline transport. Estimated
and actual investments. In billions of NOK
2005
80
80
2004
60
60
2003
2002
40
40
20
20
0
May
Aug Nov
Feb May
Estimate made
previous year
Source: Statistics Norway
Aug Nov
Estimate made
same year
Feb
0
Final figures
Chart 2.9 Underlying spending growth in the
government budget and nominal growth in mainland
GDP. Growth on previous year. Per cent.
1985 – 2005
15
15
12
12
9
Underlying
spending growth
6
3
0
9
6
Nominal growth in
mainland GDP
1985 1988 1991 1994 1997 2000 2003
Sources: Ministry of Finance (NB 2005) and Statistics
Norway
3
0
Chart 2.10 Unit labour costs (ULC). Wholesale and
retail trade and mainland Norway excl. public sector.
Index. 1990=100. Annual figures. 1970 – 2004
200
150
200
Mainland Norway
excl. public sector
100
150
100
Retail trade
50
50
0
0
1970 1975 1980 1985 1990 1995 2000
Sources: Statistics Norway and Norges Bank
Section 3
Chart 3.1 The output gap1) and CPI-ATE.
Quarterly figures. Per cent. 99 Q1 – 05 Q32)
4
4
2
CPI-ATE
0
2
0
Output gap
-2
1999 2000 2001 2002 2003 2004 2005
Quarterly figures for the output gap have been derived from
annual figures.
2) Projections for 2005
1)
Sources: Statistics Norway and Norges Bank
-2
Chart 3.2 Real interest rate after tax.1) Quarterly
figures. 85 Q1 – 04 Q4
9
9
3-month rate
6
6
3
3
0
-3
1985
5-year rate
1989
1993
1997
2001
1) 3-month
0
-3
2005
money market rates deflated by the CPI excluding
energy products up to 1995, Norges Bank's estimates for the CPI
adjusted for tax changes and excluding energy products from June
1995 to July 2000, thereafter the CPI-ATE. The same deflator is
used for 5-year rates, but from 2001 Q2 the inflation target of 2½
per cent is used
Sources: Statistics Norway and Norges Bank
Chart 3.3 The interest rate in the baseline scenario
and forward interest rates in Norway. Quarterly
figures. 04 Q1 – 08 Q4
7
7
6
6
5
5
4
4
3
3
2
2
Baseline scenario
Forward rates 10 March
1
0
2004
1
0
2005
Source: Norges Bank
2006
2007
2008
Chart 3.4a 3-month money-market rate and importweighted exchange rate (I-44)1) 2) in the baseline
scenario. Quarterly figures. 04 Q1 – 08 Q4
7
100
6
Interest rate
(left-hand scale)
5
98
4
96
3
94
2
Import-weighted exchange
rate (I-44) (right-hand scale)
1
0
2004
92
90
2005
2006
1) A rising
2007
2008
curve denotes a weaker krone exchange rate
2) The figures for 2005 Q1 are based on the average through 10
March
Source: Norges Bank
Chart 3.4b Projections for the CPI-ATE and output
gap in the baseline scenario. Quarterly figures.
Per cent. 04 Q1 – 08 Q4
3
3
2
CPI-ATE
2
Output gap
1
1
0
0
-1
-1
-2
2004
-2
2005
2006
2007
2008
Sources: Statistics Norway and Norges Bank
Chart 3.5a 3-month money market rate in the
baseline scenario and in alternative scenarios with
high and low interest rates. Quarterly figures.
04 Q1 – 08 Q4
7
7
6
6
Baseline scenario
5
4
5
4
High interest rate
3
3
2
2
Low interest rate
1
1
0
2004
0
2005
Source: Norges Bank
2006
2007
2008
Chart 3.5b Projections for the CPI-ATE and the
output gap in the baseline scenario and in
alternative scenarios with high and low interest
rates. Quarterly figures. Per cent. 04 Q1 – 08 Q4
3
3
CPI-ATE (solid lines)
2
2
1
1
0
Output gap
(broken lines)
Baseline scenario
High interest rate
Low interest rate
-1
-2
2004
2005
2006
2007
2008
Sources: Statistics Norway and Norges Bank
0
-1
-2
Chart 3.6 Credit to households (C2) in the baseline
scenario and in alternative scenarios with high and
low interest rates. Annual percentage change in
stock. 2002 – 2008
14
14
12
12
10
10
8
8
6
6
4
2
Baseline scenario
High interest rate
Low interest rate
4
2
0
0
2002 2003 2004 2005 2006 2007 2008
Source: Norges Bank
Chart 3.7a 3-month money-market rate and importweighted exchange rate (I-44)1) 2) in scenario with
lower inflation. Quarterly figures. 04 Q1 – 08 Q4
7
100
Interest rate in scenario
with lower inflation
(left-hand scale)
6
5
Interest rate in baseline
scenario (left-hand scale)
98
4
96
3
94
2
1
0
2004
Import-weighted exchange rate (I-44) in
scenario with lower inflation (right-hand scale)
92
90
2005
2006
1) A rising
2007
2008
curve denotes a weaker krone exchange rate
2) The figures for 2005 Q1 are based on the average through 10
March
Source: Norges Bank
Chart 3.7b Projections for the CPI-ATE and output
gap in the scenario with lower inflation. Quarterly
figures. Per cent. 04 Q1 – 08 Q4
3
3
CPI-ATE
2
2
1
Output gap
1
0
0
-1
-1
-2
2004
-2
2005
2006
2007
2008
Sources: Statistics Norway and Norges Bank
Chart 3.8a 3-month money-market rate and importweighted exchange rate (I-44)1) 2) in scenario with
stronger exchange rate. Quarterly figures.
04 Q1 – 08 Q4
7
100
Interest rate in scenario
with stronger exchange
rate (left-hand scale)
6
5
4
Interest rate in baseline
scenario (left-hand scale)
96
3
94
2
I-44 in
scenario with
stronger exchange
rate (right-hand scale)
1
0
2004
98
2005
2006
2007
92
90
2008
A rising curve denotes a weaker krone exchange rate
2) The figures for 2005 Q1 are based on the average through 10
March
1)
Source: Norges Bank
Chart 3.8b Projections for the CPI-ATE and output
gap in the scenario with a stronger exchange rate.
Quarterly figures. Per cent. 04 Q1 – 08 Q4
3
3
CPI-ATE
2
2
1
1
Output gap
0
0
-1
-1
-2
2004
-2
2005
2006
2007
2008
Sources: Statistics Norway and Norges Bank
Chart 3.9a 3-month money-market rate and importweighted exchange rate (I-44)1) 2) in scenario with
stronger output growth. Quarterly figures. Per cent.
04 Q1 – 08 Q4
7
100
Interest rate in scenario with stronger
output growth (left-hand scale)
6
98
Interest rate in baseline
scenario (left-hand scale)
5
4
96
3
94
2
1
Import-weighted exchange rate (I-44) in scenario
with stronger output growth (right-hand scale)
0
2004
2005
2006
1) A rising
2007
2008
curve denotes a weaker krone exchange rate.
2) The figures for 2005 Q1 are based on the average up to 10
March.
Source: Norges Bank
92
90
Chart 3.9b Projections for the CPI-ATE and output
gap in the scenario with stronger output growth.
Quarterly figures. Per cent. 04 Q1 – 08 Q4
3
3
CPI-ATE
2
1
2
1
Output gap
0
0
-1
-1
-2
2004
-2
2005
2006
2007
2008
Sources: Statistics Norway and Norges Bank
Monetary policy rules
The Taylor rule:
Interest rate = inflation target + equilibrium real interest rate + 1.5
x (inflation - inflation target) + 0.5 output gap
The rule was presented in 1993 by Professor John B. Taylor at
Stanford University (see Taylor, J.B. (1993): "Discretion versus
policy rules in practice", Carnegie-Rochester Conference Series
on Public Policy 39, pp. 195-214. In Chart 3.10 we have used the
CPI-ATE as a measure of inflation.
The Orphanides rule:The Taylor Rule is vulnerable to error in the
estimation of the output gap. Athanasios Orphanides, who is a
researcher and adviser in the Federal Reserve, therefore
proposes the alternative of replacing the output gap with the
difference between actual growth and trend growth in the
economy (the growth gap). See Orphanides A., R. D. Porter, D.
Reifschneider, R. Tetlow and F. Finan (2000) ”Errors in the
measurement of the output gap and the design of monetary
policy”, Journal of Economics and Business, vol. 52, pp.117-141.
Rule with interest rates abroad: Interest rate = 0.5 x Taylor rate +
0.5 x Money market rate among Norway's trading partners.
Chart 3.10 Sight deposit rate, Taylor rule,
Orphanides rule and rule with interest rates abroad.
Inflation as in the baseline scenario.
Quarterly figures. 99 Q1 – 05 Q2
8
Taylor rate
(blue line)
Sight deposit
rate (red line)
6
4
2
8
6
Orphanides’ rule1)
(yellow line)
Rule with interest rate
abroad (green line)
0
1999 2000 2001 2002 2003 2004 2005
1) Norges
4
2
0
Bank's projection for growth in mainland GDP one to two
quarters earlier forms the basis for the estimates
Source: Norges Bank
Chart 3.11 The sight deposit rate and interest rate
movements that follow from Norges Bank's
average pattern for the setting of interest rates.1)
Quarterly figures. 99 Q2 – 05 Q2
8
Sight deposit rate (red line)
6
4
2
8
6
Interest rate movements that follow from
Norges Bank's average pattern with a
90% confidence interval (grey area)
0
1999 2000 2001 2002 2003 2004 2005
1) The
4
2
0
interest rate movements are explained by developments in
inflation, growth in mainland GDP, wage growth and 3-month interest
rates among trading partners. A more in-depth account was provided
in Inflation Report 3/04
Source: Norges Bank
Norges Bank`s
projections
Chart 1 3-month money-market rate and importweighted exchange rate (I-44)1) 2) in the baseline
scenario. Quarterly figures. Per cent. 04 Q1 – 08 Q4
7
100
6
Interest rates
(left-hand scale)
5
98
4
96
3
94
2
Import-weighted exchange
rate (I-44) (right-hand scale)
1
0
2004
92
90
2005
2006
1) A rising
2007
2008
curve denotes a weaker krone exchange rate
2) The figure for 2005 Q1 is based on the average through 10
March
Source: Norges Bank
Chart 2 Projected CPI-ATE and output gap in the
baseline scenario. Quarterly figures. Per cent.
04 Q1 – 08 Q4
3
3
2
CPI-ATE
2
Output gap
1
1
0
0
-1
-1
-2
2004
-2
2005
2006
2007
2008
Sources: Statistics Norway and Norges Bank
Chart 3 Real growth in household disposable
income1) and consumption. Annual figures. Per cent.
1990 – 20082)
8
Real income growth
Real growth in
consumption
6
8
6
4
4
2
2
0
0
-2
-2
1990 1993 1996 1999 2002 2005 2008
1) Adjusted
for extraordinary share dividends since 2001
2) Projections for 2005 -2008
Sources: Statistics Norway and Norges Bank
Chart 4 Households’ net lending as a share of
disposable income1). Annual figures. Per cent.
1980 – 20082)
10
10
5
5
0
0
-5
-5
-10
-10
-15
-15
1980 1985 1990 1995 2000 2005
1) Adjusted
for extraordinary share dividends since 2001
for 2005 - 2008
2) Projections
Sources: Statistics Norway and Norges Bank
Chart 5 Annual wage growth1) and unemployment
rate (LFS). Annual figures. Per cent. 1993 – 20082)
Annual wage growth
6
6
4
4
Unemployment rate
2
2
0
0
1993 1995 1997 1999 2001 2003 2005 2007
1) Average
for all groups. Including cost of additional vacation days
for 2005 -2008
2) Projections
Sources: Technical Reporting Committee on Income
Settlements, Statistics Norway and Norges Bank
Chart 6 Labour force as a percentage of population
aged 16 – 74 (labour force participation rate).
Annual figures. Per cent. 1980 – 20081)
75
75
Labour force
participation rate
73
73
71
71
69
69
67
67
65
65
1980 1984 1988 1992 1996 2000 2004 2008
1) Projections
for 2005 -2008
Sources: Statistics Norway and Norges Bank
Chart 7 CPI-ATE. Total and by supplier sector.1) 12month change. Per cent. Jan 02 – Dec 082)
6
6
Goods and services produced in Norway
4
2
0
2
CPI-ATE
0
-2
-2
Imported
consumer goods
-4
-6
2002
1)
4
-4
-6
2004
2006
2008
Norges Bank's estimates
from March 05 – Dec 08
2) Projections
Sources: Statistics Norway and Norges Bank
IR 1/05
Charts for boxes
Monetary policy since
3 November
Chart 1 Interval for the sight deposit rate at the end
of each strategy period and actual developments.
Daily figures. Per cent. 1 Nov 02 – 16 Mar 05
8
7
6
5
8
2
5
Strategy period 2/03
Sight
deposit rate
1
0
Nov 02
6
Strategy period 1/03
4
3
7
Strategy period 3/02
Strategy period 3/03
Strategy period 1/04
Source: Norges Bank
3
2
Strategy period 2/04
Strategy period 3/04
Jun 03
4
Jan 04
Aug 04
1
0
Mar 05
Recent price developments
Chart 1 Prices for some imported consumer goods.
12-month change. Per cent. Jan 02 - Feb 05
5
5
Cars
0
0
Audiovisual
equipment
-5
-5
-10
-10
Clothing and footwear
-15
-15
2002
2003
Source: Statistics Norway
2004
2005
Chart 2 Prices for goods and services produced
in Norway1). 12-month change. Per cent.
Jan 02 – Feb 05
7
7
Services with wages as a dominant factor (7)
5
5
House rents
(18)
3
1
3
Consumer goods produced
in Norway2) (20)
-1
1
-1
Other
services (20)
-3
-3
2002
2003
2004
1) Adjusted
2005
for tax changes and excluding energy products.
Percentage share of CPI-ATE in brackets. Norges Bank's
estimates up to December 2003
2) Excluding energy and agricultural and fish products
Sources: Statistics Norway and Norges Bank
Chart 3 Prices for food and non-alcoholic
beverages. 12-month change. Per cent.
Jul 02 – Feb 05
5
5
4
4
3
3
2
2
1
1
0
0
Jul 02 Jan 03 Jul 03 Jan 04 Jul 04 Jan 05
Source: Statistics Norway
Chart 4 Indicators of underlying price inflation.
12-month change. Per cent. Jan 02 – Feb 05
5
5
Weighted median1)
4
4
Trimmed median2)
3
3
2
2
1
1
CPI-ATE
0
0
-1
-1
2002
2003
2004
2005
Estimated on the basis of 93 sub-groups of the CPI
changes accounting for 20% of the weighting base are
eliminated
1)
2) Price
Source: Statistics Norway
Chart 5 CPI-ATE including and excluding prices for
clothing and footwear1). Monthly change. Per cent.
Jun 03 – Feb 05
1
1
CPI-ATE
0.5
0.5
0
-0.5
-1
Jun 03
1)
0
-0.5
CPI-ATE excluding
clothing and footwear
-1
Dec 03
Jun 04
Dec 04
Norges Bank's estimates
Sources: Statistics Norway and Norges Bank
Chart 6 CPI and CPI-ATE. 12-month change.
Per cent. Jan 02 - Feb 05
6
6
5
5
CPI
4
4
3
3
2
2
1
1
CPI-ATE
0
0
-1
-1
-2
-2
-3
-3
2002
2003
Source: Statistics Norway
2004
2005
Why are long-term interest
rates so low?
Chart 1 Government bonds with a 10-year maturity.
US, Germany and Norway. Daily figures. Per cent.
3 Jan 00 – 10 Mar 05
8
8
6
6
4
4
2
2
Norway
0
2000
Germany
US
0
2001
Source: EcoWin
2002
2003
2004
2005
Chart 2 Long-term inflation expectations and implied
5-year rates 5 years ahead less long-term inflation
expectations
6
6
Implied 5-year rates 5 years ahead less
long-term inflation expectations
5
5
4
4
3
3
2
2
Inflation expectations
1
1
0
1996
0
1998
2000
Sources: EcoWin and Norges Bank
2002
2004
Chart 3 12-month rise in the CPI-ATE given different
values of the neutral real interest rate, while assuming
that it is 3 per cent
4
4
r*=3.5
3
r*=4.0
3
r*=3
2
2
r*=2.0
1
0
2004
1
r*=2.5
0
2005
2006
2007
2008
Sources: Statistics Norway and Norges Bank
Chart 4 The output gap given different values of the
neutral real interest rate, while assuming that it is 3
per cent
3
3
r*=3.5
r*=3
2
r*=4.0
2
1
1
0
0
r*=2.5
-1
-2
2004
r*=2.0
-1
-2
2005
Source: Norges Bank
2006
2007
2008
Developments in household
debt
Chart 1 3-month money market rate in the baseline
scenario and in alternative scenarios with high and
low interest rates. Quarterly figures.
02 Q1 – 08 Q4
8
8
Baseline scenario
Low interest rate
High interest rate
6
6
4
4
2
2
0
2002 2003 2004 2005 2006 2007 2008
0
Source: Norges Bank
Chart 2 Rise in house prices.
Annual figures. Per cent. 1992 – 20081)
18
18
14
14
10
10
6
6
2
2
-2
Baseline scenario
Low interest rate
High interest rate
-6
-10
-6
-10
1992
1)
-2
1996
2000
2004
2008
Projections for 2005 – 2008
Sources: Norwegian Association of Real Estate Agents,
Association of Real Estate Agency Firms, Finn.no, ECON
and Norges Bank
Chart 3 Credit to households (C2). Annual
percentage change in household debt.
2002 – 20081)
14
14
12
12
10
10
8
8
6
6
4
Baseline scenario
Low interest rate
High interest rate
2
4
2
0
0
2002 2003 2004 2005 2006 2007 2008
1)
Projections for 2005 – 2008
Source: Norges Bank
Chart 4 Projections of household debt burden1).
Annual figures. Per cent. 2002 – 20082)
220
220
200
200
180
180
160
Baseline scenario
Low interest rate
High interest rate
160
140
140
2002 2003 2004 2005 2006 2007 2008
Loan debt as a percentage of disposable income less the return on
insurance claims.
2) Projections for 2005 – 2008
1)
Source: Norges Bank
Chart 5 Projections of households' interest
burden1). Annual figures. Per cent. 2002 -20082)
10
10
8
8
6
6
4
4
2
Baseline scenario
Low interest rate
High interest rate
2
0
0
2002 2003 2004 2005 2006 2007 2008
1) Interest
expenses as a percentage of disposable income less the
return on insurance claims plus interest expenses
2) Projections for 2005 – 2008
Source: Norges Bank
Evaluation of Norges
Bank's projections for 2004
Chart 1 CPI-ATE1). Total and by supplier sector.2) 12month change. Per cent. Jan 02 – Feb 05
6
6
4
Goods and services produced in Norway
2
4
2
CPI-ATE
0
0
-2
-2
-4
-4
Imported consumer goods
-6
-6
2002
1) CPI-ATE:
2003
2004
2005
CPI adjusted for tax changes and excluding energy
products
2) Norges Bank's estimates
Sources: Statistics Norway and Norges Bank
Chart 2 CPI-ATE. Projections for 2004 published at
different times. Per cent
3
2
3
Nordea
DnB / DnB
NOR
2
Ministry of
Finance
Statistics Norway
1
1
Norges Bank
Actual inflation in 2004
0
0
2002
2003
2004
Sources: Statistics Norway, the Ministry of Finance,
DnB NOR, Nordea and Norges Bank
Chart 3 CPI-ATE. Projections in IR 3/04, projections
from time series model and actual price movements.
12-month change. Per cent. Dec 03 – Feb 05
1.4
1.2
1.4
Projections IR 3/04
1.2
1.0
1.0
0.8
0.8
0.6
0.6
0.4
Actual CPI-ATE
Time series
model
0.4
0.2
0.2
0.0
0.0
-0.2
Dec-03
-0.2
Jun-04
Dec-04
Sources: Statistics Norway and Norges Bank
Chart 4 Projections for the CPI-ATE1) and the output
gap2) in Inflation Report 3/04 (red) and 1/05 (blue).
Per cent
3
2
3
CPI-ATE
2
IR 3/04
IR 1/05
1
1
0
0
-1
-1
Output gap
-2
2002 2003 2004 2005 2006 2007 2008
1) CPI-ATE:
CPI adjusted for tax changes and excluding energy
products
2) The output gap measures the difference between actual and
trend mainland GDP
Sources: Statistics Norway and Norges Bank
-2
Chart 5 Mainland GDP. The last two projections
published for 2005.1) Percentage change
5
5
4
4
3
3
2
2
1
1
0
5/04 10/04
FIN
1) The
12/04 3/05
SN
11/04 3/05
0
NB
figures under the columns refer to publication month and year
Sources: Revised National Budget 2004, National Budget
2005, Economic Survey 4/2004, and 1/2005, Inflation
Report 3/2004 and 1/2005
Chart 6 CPI-ATE. The last two projections published
for 2005.1) Percentage change
2.5
2.5
2
2
1.5
1.5
1
1
0.5
0.5
0
5/04 10/04
FIN
1)
12/04 3/05
SN
11/04
NB
3/05
0
The figures under the columns refer to publication month and year
Source: Revised National Budget 2004
National Budget 2005, Economic Survey 4/2004
and 1/2005, Inflation Report 3/2004 and 1/2005
Low inflation in the Nordic
countries
Chart 1 Harmonised indices of consumer prices in
the Nordic countries and the euro area. 12-month
change. Per cent. Jan 02 – Jan 05
6
4
6
Sweden
Denmark
4
Euro area
2
2
0
0
Finland
Norway
-2
-2
2002
Source: Eurostat
2003
2004
2005
Annex
Chart 1 Norwegian interest rates. 3-month money market rate, sight
deposit rate1) and 10-year government bond yield. Monthly figures.
Jan 95 – Feb 05
10
10
8
10-year government
bond yield
3-month money market rate
8
6
6
4
4
Sight deposit rate
2
2
0
0
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
1) The
money market rate is normally about ¼ percentage point higher than the sight
deposit rate.
Sources: EcoWin and Norges Bank
Chart 2 3-month interest rates in the US, the euro area and Japan.
Monthly figures. Jan 95 – Feb 05
10
10
8
8
US
6
6
4
Euro area1)
2
4
2
Japan
0
0
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
1)
Theoretical ECU rate up to and including December 1998
Sources: EcoWin and Norges Bank
Chart 3 3-month interest rates in the UK, Sweden and among trading
partners. Monthly figures. Jan 95 – Feb 05
10
10
8
Sweden
6
8
UK
4
4
2
6
Trading partners
2
0
0
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
Sources: EcoWin and Norges Bank
Chart 4 Trade-weighted exchange rate index (TWI) and import-weighted
exchange rate (I-44).1) Monthly figures. Jan 95 – Feb 05
115
115
Trade-weighted exchange rate
index, TWI (1990=100)
110
110
105
105
100
100
95
Import-weighted exchange rate, I-44
(1995=100)
90
95
90
85
85
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
1)A rising
curve denotes a weaker krone exchange rate.
Sources: EcoWin and Norges Bank
Chart 5 Bilateral exchange rates. Monthly figures. Jan 95 – Feb 05
10
9
NOK/EUR
(left-hand scale)
NOK/USD
(left-hand scale)
120
110
100
8
90
7
NOK/SEK
(right-hand scale)
6
80
70
5
60
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
Sources: EcoWin and Norges Bank
Chart 6 The credit indicator (C2), credit to households and total credit to the nonfinancial private sector and municipalities, mainland Norway (C3).
12-month change. Per cent . Jan 97 – Jan. 05
20
20
15
15
Credit to households
10
C2
5
0
1997
10
5
C3 mainland Norway
0
1998
1999
Source: Norges Bank
2000
2001
2002
2003
2004
2005
Assumption for money market rate1).
Quarterly figures. 01 Q1 – 08 Q4
10
8
10
3-month money market
rate
8
6
6
4
4
Interest rate in
the baseline
scenario
2
0
2001
2
0
2003
2005
2007
The money market rate is normally about ¼ percentage point higher
than the sight deposit rate.
1)
Source: Norges Bank
The krone exchange rate (I-44)1). Forward exchange
rate. Monthly figures. Jan 01 – Dec 08
110
110
100
100
Forward exchange
rate 10 March
90
90
Import-weighted exchange rate, I-44
80
2001
1)A rising
80
2003
2005
2007
curve denotes a weaker krone exchange rate.
Source: Norges Bank

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