Norges Bank

1

Executive Board Meeting16 March 2005

Norges Bank

2

Economic developments

Norges Bank

3

The euro areaGDP growth on same quarter previous year

Source: EcoWin / National statistical offices

-1

0

1

2

3

4

Oct 01 Apr 02 Oct 02 Apr 03 Oct 03 Apr 04 Oct 04

-1

0

1

2

3

4Euro area Germany France Italy Spain

Norges Bank

4

The euro areaGrowth in private consumption and investment

on same quarter previous year

Source: EcoWin / National statistical offices

-4

-2

0

2

4

6

2001 2002 2003 2004

-4

-2

0

2

4

6Euro area Germany France Italy Spain

Norges Bank

5

Interest rate expectations 14 March 2005

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

UK

Euro area

US

Norway

Norges Bank

6

Interest rate increases in this business cycle

Sources: Reuters, Bloomberg and Norges Bank

First interest rate increase

Key rate at lowest point

Current key rate

Change since lowest point

Iceland 06.05.2004 5.30 8.75 3.45

New Zealand 29.01.2004 5.00 6.75 1.75

UK 06.11.2003 3.50 4.75 1.25

US 30.06.2004 1.00 2.50 1.50

Australia 08.05.2002 4.25 5.50 1.25

Canada 08.09.2004 2.00 2.50 0.50

Switzerland 17.06.2004 0.00-0.75 0.25-1.25 0.50

Euro area 2.00 2.00 0.00

Sweden 2.00 2.00 0.00

Japan Towards zero Towards zero 0.00

Trading partners1) 06.05.2004 2.02 2.30 0.28

1) Estimated as a weighted average of 9 countries, where the weightings take account of the countries with a fixed exchange rate against USD and EUR. On 31 December 2003 this interest rate was 2.15 per cent.

Norges Bank

7

Interest rate differential and TWI

-1

0

1

2

3

4

5

2002 2003 2004 2005 2006

90

94

98

102

106

110

114

Sources: Norges Bank and Bloomberg

TWI (right-hand scale)

Weighted interest rate differential (left-hand scale)

14 March 05

1 February 05

Norges Bank

8

15

25

35

45

55

2002 2003 2004 2005 2006 2007

15

25

35

45

55

Oil price Brent Blend USD per barrel. Daily figures

11 March

13 December

Forward prices 28 October (IR 3/04)

Sources: Telerate, IPE and Norges Bank

Norges Bank

9

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

15

25

35

45

55

2001 2002 2003 2004 200515

25

35

45

55

Delivery in 6-7 years

Delivery in 1 month

Source: EcoWin/NYMEX

Norges Bank

10

0

2

4

6

8

2000 2001 2002 2003 2004 2005

0

2

4

6

8

Spare capacity for OPEC 10Million barrels per day

Sources: EIA (annual figures) and IEA (monthly figures)

Monthly figures

Annual figures

Norges Bank

11

Global growth in demand for oilSupply excluding OPEC and demand for OPEC oil.

Projected growth from 2004 to 2005. In million barrels per day

-0.5

0

0.5

1

1.5

2

Global demand Supply excl. OPEC Demand for OPEC oil

December February

Source: IEA

Norges Bank

12

-30

-15

0

15

30

1992 1994 1996 1998 2000 2002 2004

-30

-15

0

15

30

Unadjusted

Source: TNS Gallup

Trend

Consumer confidence indicatorUnadjusted and trend (level)

Norges Bank

13

Credit1) to households and enterprises12-month growth. Per cent. January 1997 – January 2005

-3

0

3

6

9

12

15

18

1997 1999 2001 2003 2005

-3

0

3

6

9

12

15

18

Credit to non-financial enterprises

1) From domestic sources (C2)

Credit to households

Source: Norges Bank

Norges Bank

14

New private car registrations 12-month growth. Per cent

-20

0

20

40

60

80

2003 2004 2005

-20

0

20

40

60

80

Source: Norwegian Roads Federation

Norges Bank

15

Manufacturing output indexVolume. Index. 3-month moving average

90

95

100

105

110

115

2000 2001 2002 2003 2004 2005

90

95

100

105

110

115

Consumer goods

Intermediate goods

Capital goods

Source: Statistics Norway

Norges Bank

16

-10

-5

0

5

10

15

20

1997 1998 1999 2000 2001 2002 2003 2004

-10

-5

0

5

10

15

20

Business tendency surveyBusiness climate index.

Seasonally adjusted diffusion index1)

1) A value of more than 0 implies that the majority of industrial leaders expect a positive trend in the next quarter.

Norges Bank

17

Regional network

• Growth in demand and output is either unchanged or stronger in all business sectors, compared with autumn 2004.

• The private and public sectors are planning a moderate increase in investment.

• Employment growth has been moderate in retail trade and somewhat stronger in building and construction. In the period ahead, employment is expected to rise throughout the private sector, with the exception of manufacturing.

• The share expecting a higher rise in selling prices in 2005 is larger than the share that expects a slower rise in prices. TNS Gallup's business climate survey shows a more neutral picture.

Norges Bank

18

Investment intentions survey. ManufacturingAssumed and actual investment. In billions of NOK

0

5

10

15

20

25

May Aug Nov Feb May Aug Nov Actual

0

5

10

15

20

25

2002

2003

2005 2004

Estimate made previous year Estimate made current year

Source: Statistics Norway

Norges Bank

19

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 made previous year Estimate made current year

Source: Statistics Norway

Norges Bank

20

0

25

50

75

100

125

1998 1999 2000 2001 2002 2003 2004 2005

0

25

50

75

100

125

Number unemployed (LFS), number of registered unemployed and persons on labour market

programmes. Seasonally adjusted1)

LFS unemployment

Registered unemployed andon labour market programmes

Registered unemployed

Sources: Statistics Norway and the Directorate of Labour

1) LFS unemployment: 3-month moving average. Unemployed for more than 26 weeks: unadjusted figures

Unemployed more than 26 weeks

Norges Bank

21

Person-hours workedSeasonally adjusted. Quarterly figures. In millions per quarter.

1995 Q4 – 2004 Q4

720

740

760

780

800

820

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

720

740

760

780

800

820

Source: Statistics Norway

Norges Bank

22

CPI-ATETotal and broken down into imported and domestically produced goods and services1). Historical inflation and

projections IR 3/04 (broken line).12-month change. Per cent

-6

-4

-2

0

2

4

Jul 03 Nov 03 Mar 04 Jul 04 Nov 04

-6

-4

-2

0

2

4

Sources: Statistics Norway and Norges Bank

Domestically produced goods and services (0.7)

1) Norges Bank's estimates

Imported consumer goods (0.3)

CPI-ATE

Norges Bank

23

Expected consumer price inflation in 2 years Per cent. Quarterly figures. 2002 Q2 – 2005 Q1

0

1

2

3

4

Jun 02 Dec 02 Jun 03 Dec 03 Jun 04 Dec 04

0

1

2

3

4

Source: TNS Gallup

Experts

Employers' organisations

Employees' organisations

Norges Bank

24

Expected consumer price inflation in 5 years

Per cent. Quarterly figures. 2002 Q2 – 2005 Q1

0

1

2

3

4

Jun 02 Dec 02 Jun 03 Dec 03 Jun 04 Dec 04

0

1

2

3

4

Experts

Employers' organisations

Source: TNS Gallup

Employees' organisations

Norges Bank

25

3-month money-market rate and import-weighted exchange rate (I-44)1)2)

in the baseline scenario Quarterly figures. Per cent. 2004 Q1 – 2008 Q4

0

1

2

3

4

5

6

7

2004 2005 2006 2007 2008

90

92

94

96

98

100

Interest rate (left-hand scale)

Import-weighted exchange rate (I-44) (right-hand scale)

1) A rising 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

Norges Bank

26

Projections and uncertainty for CPI-ATE1)

12-month rise. Per cent. January 2001 – December 2007

30% 50% 70% 90%

Sources: Statistics Norway and Norges Bank

0

1

2

3

4

5

2001 2002 2003 2004 2005 2006 2007 2008

0

1

2

3

4

5

Norges Bank

27

Projections for the CPI-ATE1) and the output gap2) in Inflation Report 3/04 (red) and 1/05 (blue). Per cent

-2

-1

0

1

2

3

2002 2003 2004 2005 2006 2007 2008

-2

-1

0

1

2

3

Sources: Statistics Norway and Norges Bank

CPI-ATE

Output gap

IR 3/04IR 1/05

Norges Bank

28

Projections for the CPI-ATE1) and the output gap2) in Inflation Report 3/04 (red) and 1/05

(blue). Per cent

-2

-1

0

1

2

3

2002 2003 2004 2005 2006 2007 2008

-2

-1

0

1

2

3

Sources: Statistics Norway and Norges Bank

CPI-ATE

Output gap

IR 3/04IR 1/05

Norges Bank

29

Projections for main macroeconomic aggregates IR 1/05

Source: Norges Bank

2004 2005 2006 2007 2008

Mainland demand 4.0 4 3¾ 2¼ 1¾

Private consumption 4.3 4¼ 3¾ 2½ 2

Public consumption 2.0 1¾ 1½ 1½ 1½

Mainland gross investment 6.2 7¼ 6½ 2¼ ½

Petroleum investment 11.5 25 -5 -2½ 0

Traditional exports 3.0 5½ 3½ 3½ 3½

Imports 9.0 7½ 3½ 2¼ 1¾

Mainland GDP 3.5 4 3 2¼ 2

Employment 0.2 1½ 1½ ¾ ¼

LFS unemployment (rate) 4.5 4 3½ 3¾ 4

CPI-ATE 0.3 1 1¾ 2¼ 2½

Annual wages 3¾ 4 4½ 4¾ 4¾

Output gap mainland Norway -¾ ¾ 1¼ 1 ½