Norges Bank

1

Executive Board meeting24 January 2007

Norges Bank

2

Growth forecasts Consensus ForecastsGDP. Percentage change from previous year

0

2

4

6

8

10

12

US Japan Euroarea

Sweden China

December

January

0

2

4

6

8

10

12

US Japan Euroarea

Sweden China

December

January

2006 2007

Source: Consensus Forecasts

Norges Bank

3

House prices1) and housing starts in the US Seasonally adjusted. 12-month change.2) January 2003 – December 2006

-30

-20

-10

0

10

20

2003 2004 2005 2006 2007

-30

-20

-10

0

10

20

1) Median price for dwellings2) 3-month moving average

Existing dwellingsNew dwellings

Housing starts

Sources: Reuters EcoWin and Norges Bank

Norges Bank

4

0

100

200

300

400

500

600

700

2002 2003 2004 2005 2006 2007

Oil prices, futures prices and commodity prices 1 January 2002 – 22 January 2007

10

20

30

40

50

60

70

80

90

2002 2004 2006 2008

22 January 2007

Sources: Telerate, IPE, Reuters EcoWin and Norges Bank

26 October IR 3/06

Copper

Nickel

Aluminium

Zinc

Oil price Brent Blend and futures pricesUSD per barrel

Commodity prices In USD. Indices, 1 January 2002 = 100

Norges Bank

5

CPI/HICP core 12-month change. Per cent. January 1997 – December 2006

-2

-1

0

1

2

3

4

1997 1999 2001 2003 2005 2007

-2

-1

0

1

2

3

4

Sources: Reuters EcoWin, Eurostat and national statistical offices

UK1)

US2)

Euro area1)

Japan2)

1) HICP excl. energy, food, alcohol and tobacco 2) CPI excl. food and energy

Sweden1)

Norges Bank

6

80

90

100

110

120

130

140

Jan 06 Mar 06 May 06 Jul 06 Sep 06 Nov 06 Jan 07

80

90

100

110

120

130

140

Equities Indices,1 January 2006 = 100. 1 January 2006 – 22 January 2007

Euro area

US

Japan

Norway

Sources: STOXX, S&P500, Nikkei, Oslo Stock Exchange and Reuters EcoWin

Emerging markets

Norges Bank

7

10-year yield in different countries Per cent. 1 January 2006 – 22 January 2007

3.0

3.5

4.0

4.5

5.0

5.5

Jan 06 Mar 06 May 06 Jul 06 Sep 06 Nov 06 Jan 07

3.0

3.5

4.0

4.5

5.0

5.5

Norway

US

Germany

Sweden

UK

Sources: Reuters and Bloomberg

Norges Bank

8

2

4

6

8

10

2002 2003 2004 2005 2006 2007

2

4

6

8

10

Expected 5-year yield five years aheadPer cent. 2 January 2002 – 22 January 2007

Source: Norges Bank

Norges Bank

9Sources: Reuters and Norges Bank

0

1

2

3

4

5

6

Jan 03 Jan 04 Jan 05 Jan 06 Jan 07 Jan 08 Jan 09

0

1

2

3

4

5

6

US

Euro area22 January 2007

IR 3/06 (31 October)

Sweden

UK

Key rates and forward rates IR 3/06 and 22 January 2007

Norges Bank

10

-1

0

1

2

3

4

5

2002 2003 2004 2005 2006 2007 2008 2009

85

88

91

94

97

100

103

Sources: Bloomberg and Norges Bank

I-44 (right-hand scale)

Weighted interest ratedifferential (left-hand scale)

31 October 2006(IR 3/06)

22 January 2007

1) A rising curve denotes an appreciation of the krone.

3-month interest rate differential and import-weighted exchange rate (I-44)1)

January 2002 – December 2009

Average 1 – 22 January 2007

Norges Bank

11

CPI and uncertainty interval for underlying inflation1)

12-month change. Per cent. January 2002 – December 2006

-2

0

2

4

6

2002 2003 2004 2005 2006

-2

0

2

4

6

Highest indicator

Lowest indicator

Sources: Statistics Norway and Norges Bank

CPI

1) Highest and lowest indicators of the CPI-ATE, the weighted median and the 20% trimmed mean

Norges Bank

12

-5

-4

-3

-2

-1

0

1

2

3

4

2002 2002 2003 2003 2004 2004 2005 2005 2006 2006 2007

-5

-4

-3

-2

-1

0

1

2

3

4

CPI-ATE1)

Total and by supplier sector2). 12-month change. Per cent. January 2002 – December 2006

Sources: Statistics Norway and Norges Bank

Domestically produced goods and services (0.7)

Imported consumer goods (0.3)

CPI-ATE

1) CPI-ATE adjusted for the estimated effect of reduced maximum day-care rates from January 2006.2) Norges Bank's estimates.

Norges Bank

13

UnemploymentLFS unemployment and registered unemployed. Seasonally adjusted.

Per cent. February 1983 - December 2006

0

2

4

6

8

1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005

0

2

4

6

8

Sources: Statistics Norway and Norwegian Labour and Welfare Organisation (NAV)

LFS unemployment

Registered unemployed

Norges Bank

14

2220

2250

2280

2310

2340

2370

2400

2430

1999 2000 2001 2002 2003 2004 2005 2006

2220

2250

2280

2310

2340

2370

2400

2430

Source: Statistics Norway

Employment (LFS)1)

In 1000s. Seasonally adjusted. January 2005 – October 2006

1) The changes to the LFS resulted in a break in the time series between 2005 and 2006.

Norges Bank

15

Manufacturing output index Volume. Index. 3-month moving average.

January 2001 – November 2006

90

95

100

105

110

115

120

2001 2002 2003 2004 2005 2006

90

95

100

105

110

115

120

Consumer goodsIntermediate goods

Capital goods

Source: Statistics Norway

Norges Bank

16

-5

5

15

25

35

2002 2003 2004 2005 2006

-5

5

15

25

35

Enterprise sector credit1) and liquid assets2) 12-month growth. Per cent. January 2002 – November 2006 (C3 to October)

1) Mainland non-financial enterprises (C3).2) Non-financial enterprises' liquid assets (M2).

Money supply (M2)

Source: Statistics Norway

Total credit (C3)

Norges Bank

17

Index of commodity consumption Volume. Seasonally adjusted. Index, 1995 = 100.

January 2004 – November 2006

130

135

140

145

150

155

Jan 04 Jun 04 Nov 04 Apr 05 Sep 05 Feb 06 Jul 06 Dec 06

130

135

140

145

150

155

Sources: Statistics Norway and Norges Bank

Norges Bank

18

House prices and household debt12-month change. Per cent. January 2001 – December 2006

(C2 to November)

-5

0

5

10

15

20

25

2001 2002 2003 2004 2005 2006 2007

6

8

10

12

14

2001 2002 2003 2004 2005 2006

House prices Household debt (C2)

Sources: Norwegian Assoc. of Real Estate Agents, Assoc. of Real Estate Agency Firms, Finn.no, ECON and Norges Bank

Norges Bank

19

Construction cost index for residential buildings12-month rise. Per cent. January 2001 – December 2006

0

1

2

3

4

5

6

7

2001 2002 2003 2004 2005 2006

0

1

2

3

4

5

6

7

Source: Statistics Norway

Norges Bank

20

3

3.5

4

4.5

5

5.5

6

07 Q1 07 Q3 08 Q1 08 Q3 09 Q1 09 Q3

3

3.5

4

4.5

5

5.5

6

Sight deposit rate in baseline scenario and estimated forward rates1)

Per cent. At 22 January 2007

Market 22 January 2007

Market before IR 3/06 (31 October)

Baseline scenario IR 3/06

Sources: Reuters and Norges Bank

1) In the calculation, a credit risk premium and a technical difference of 0.20 percentage point have been deducted to make the forward rates comparable with the sight deposit rate.

Norges Bank

21

Monetary Policy Strategy - Inflation Report 3/06

• The Executive Board’s assessment is that the sight deposit rate

should be in the interval 3¼ - 4¼ per cent in the period to the

publication of the next Inflation Report on 15 March 2007,

conditional on economic developments that are broadly in line

with the projections.

• The interest rate may gradually be raised to a more normal level

at a somewhat faster pace than envisaged earlier, although it is

unlikely that rates will be raised at every monetary policy

meeting. In the light of our current assessment, the interest rate

will thus continue to be raised in small, not too frequent steps.

Norges Bank

22

-2

-1

0

1

2

3

2004 2005 2006 2007 2008 2009

-2

-1

0

1

2

3

Baseline scenario in Inflation Report 3/06

0

1

2

3

4

5

6

7

8

9

2004 2005 2006 2007 2008 2009

0

1

2

3

4

5

6

7

8

9

70

80

90

100

110

2004 2005 2006 2007 2008 2009

70

80

90

100

110

0

1

2

3

4

2004 2005 2006 2007 2008 2009

0

1

2

3

4

Import-weighted exchange rate

CPI-ATE Output gap

Sight deposit rate

Sources: Statistics Norway and Norges Bank

Norges Bank

23

Executive Board meeting24 January 2007