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Norges Bank
1
Executive Board meeting26 May 2004
Norges Bank
2
Interest and exchange rate assumptions and CPI projections adjusted for tax changes and excluding energy products (CPI-ATE) and the output gap in Inflation Report 1/04. Per cent
-2
-1
0
1
2
3
2002 2003 2004 2005 2006-2
-1
0
1
2
3
CPI-ATE
Output gap
85
90
95
100
105
2002 2003 2004 2005 2006
0
2
4
6
8
10
Money market rate (right-hand scale)
Source: Norges Bank
Krone exchange rate, I-44 (left-hand scale)
Sources: Statistics Norway and Norges Bank
Norges Bank
3
0
2
4
6
2000 2001 2002 2003 2004 2005
0
2
4
6
Historical and expected key ratesat 24 May and 20 April 2004. Daily figures. Jan 2000 - Jun 2005
US
Sources: EcoWin, Bloomberg and Norges Bank
At 24 May
At 20 April
Euro area
Norges Bank
4
Historical and expected key ratesat 24 May and 20 April 2004. Daily figures. Jan 2000 - Jun 2005
0
2
4
6
2000 2001 2002 2003 2004 2005
0
2
4
6
UK
Sources: EcoWin, Bloomberg, Bank of England and Norges Bank
At 24 May
At 20 April
Sweden
Norges Bank
5
5
15
25
35
45
2002 2003 2004 2005 2006
5
15
25
35
45
Oil price Brent Blend (North Sea oil)USD and EUR per barrel. Daily figures. 2002-2006
Sources: Telerate, IPE and Norges Bank
Futures prices in USD24 May 2004
Assumption IR 1/04
EUR per barrel
USD per barrel
Norges Bank
6
Producer prices in the US, the euro area and JapanPercentage change on same month previous year. Jan 1998 - Apr 2004
-4
-2
0
2
4
6
1998 1999 2000 2001 2002 2003 2004
-4
-2
0
2
4
6
US
Sources: EcoWin / National statistics
Japan
Euro area
Norges Bank
7
Prices for some commodities measured in USDIndex. 02.01.01 = 100. Daily figures 01.01.03 – 24.05.04
80
100
120
140
160
180
200
Jan 03 Apr 03 Jul 03 Oct 03 Jan 04 Apr 04
80
100
120
140
160
180
200
Sources: London Metal Exchange / IEA
Copper
Aluminium
Coal
The Economist commodity price index
Norges Bank
8
Consumer prices adjusted for tax changes and excluding energy products (CPI-ATE). Jan 01- Apr 04. Projections Feb 04 - Dec 06 from IR 1/04. 12-month rise. Per cent
-6
-4
-2
0
2
4
6
2001 2002 2003 2004 2005 2006
-6
-4
-2
0
2
4
6
Sources: Statistics Norway and Norges Bank
Goods and services produced in Norway
CPI-ATE
Imported consumer goods
Norges Bank
9
0
1
2
3
4
Jun 02 Dec 02 Jun 03 Dec 03 Jun 04
0
1
2
3
4
Projected consumer price inflation2002 Q2 - 2004 Q2
0
1
2
3
4
Jun 02 Dec 02 Jun 03 Dec 03 Jun 04
0
1
2
3
4
Experts
Employers' organisations
Source: TNS Gallup
Employees' organisations
In 2 years In 5 years
Experts
Employers' organisations
Employees' organisations
Norges Bank
10
90
92
94
96
98
100
102
Nov 03 Dec 03 Jan 04 Feb 04 Mar 04 Apr 04 May 04
90
92
94
96
98
100
102
Import-weighted exchange rate (I-44)1)
Daily figures. 3 Nov 2003 – 24 May 2004
Source: Norges Bank
1) A falling curve denotes an appreciation of the krone
CPIMonetary policy meeting 21 April
IR 1/04
Norges Bank
11
Forward rate in Norway and among trading partnersMay 2004 - December 2007
0
1
2
3
4
5
6
Mar 04 Sep 04 Mar 05 Sep 05 Mar 06 Sep 06 Mar 07 Sep 07
0
1
2
3
4
5
6
Forward rate Norway
Forward rate trading partners
Source: Norges Bank
At 24 May
At 20 April
Norges Bank
12
118
121
124
127
130
133
136
139
142
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
118
121
124
127
130
133
136
139
142
Index of commodity consumption1995 = 100. Seasonally adjusted volume. Jan 01 - Mar 04
2002
2003
2004
Source: Statistics Norway
Norges Bank
13
Number of unemployed (LFS), number of registered unemployed and persons on labour market programmes. Percentage of the labour force. Seasonally adjusted. Jan 95 - Apr 04
0
2
4
6
8
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
0
2
4
6
8
Registered unemployed and labour market programmes
Registered unemployed
LFS unemployment
Sources: Statistics Norway, the Directorate of Labour and Norges Bank
Norges Bank
14
Employed persons and person-weeksSeasonally adjusted. In millions
2.15
2.20
2.25
2.30
Jan 01 Jul 01 Jan 02 Jul 02 Jan 03 Jul 03 Jan 04
1.70
1.75
1.80
1.85
Source: Statistics Norway
Employment (left-hand scale)
Person weeks1) (right-hand scale)
1) Person-weeks of 37.5 hours
Norges Bank
15
Revised National Budget 2004
2003 2004
NB04 RNB04 NB04 RNB04
Structural surplus. Percentage of trend mainland GDP
-3.3 -3.9 -3.9 -4.2
- change on previous year (= budget indicator (pp))
-0.2 -0.9 -0.6 -0.4
Underlying growth in central govt budget expenditure:
- nominal (per cent) 3.9 4.9 5.4 5.2
- real (per cent) 0.1 1.1 2.1 2.3
Norges Bank
16
Consumer pricesin the US, the euro area, the UK, Sweden and China. 12-month rise. Per cent. Jan 2000 - Apr 2004
-2
-1
0
1
2
3
4
2000 2001 2002 2003 2004
-2
-1
0
1
2
3
4
Sources: Bureau of Labor Statistics, Eurostat, Office for National Statistics, Statistics Sweden and EcoWin
UK (HICP)
US (CPI excl. food and energy)
Euro area (HICP)Sweden (UND1X)
China
Norges Bank
17
-3
-2
-1
0
1
2
3
Oct 03 Jan 04 Apr 04 Jul 04 Oct 04
-3
-2
-1
0
1
2
3
CPI-ATE. Historical developments (blue) and projections from IR 1/04 (red). Seasonally adjusted 3-month moving average, annualised, and 12-month rise1). Oct 2003 – Nov 2004
Projections
1) The bars show the 3-month moving average. The curves show the 12-month rise The striped bar shows the new projections for April and May due to new history
Sources: Statistics Norway and Norges Bank
Norges Bank
18
Krone exchange rate1) and oil price (USD/barrel)1 Jan 2003 – 24 May 2004
0
10
20
30
40
Jan 03 May 03 Sep 03 Jan 04 May 04
80
85
90
95
100
105
Oil price (left-hand scale)
Krone exchange rate (right-hand scale)
Source: Norges Bank
1) I-44. A rising curve denotes an appreciation of the krone
Norges Bank
19
Norges Bank Regional Network
• Activity levels are increasing in most industries
• The growth outlook for the next six months is considered favourable
• Moderate growth in investment plans for the private and public sector
• Employment in the business sector is rising moderately with the exception of manufacturing
• Employment in the public sector and manufacturing is reported to be approximately unchanged
• Annual wage growth is projected to be lower in 2004 than in 2003
• Profitability is reported to have improved in the business sector
Norges Bank
20
Business sentiment indicator for manufacturingSeasonally adjusted diffusion index1). 1997 Q1 – 2004 Q1
-10
-5
0
5
10
15
20
1997 1998 1999 2000 2001 2002 2003 2004
-10
-5
0
5
10
15
20
1) A value of less than 0 implies that the majority of industrial leaders expect a weaker outlook in the next quarter.
Sources: Statistics Norway and Norges Bank
Norges Bank
21
-30
-15
0
15
30
45
1999 2000 2001 2002 2003 2004
-30
-15
0
15
30
45
TotalPersonal financial situation
Country's economic situation
Source: TNS Gallup
Household confidence indicator
1999 Q1 - 2004 Q2. Unadjusted figures.
Norges Bank
22
Projections and uncertainty for CPI-ATE. Inflation Report 1/04. 12-month rise. Per cent. Jan 01 - Dec 05
-1
0
1
2
3
4
Jan 03 Jul 03 Jan 04 Jul 04 Jan 05 Jul 05
-1
0
1
2
3
4
30% 50% 70% 90%
The bands in the fan indicate different probabilities for developments in the CPI-ATE.
Sources: Statistics Norway and Norges Bank
Actual
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