Executive Board meeting 26 May 2004

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


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


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.


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.


Actual

Executive Board meeting 26 May 2004

Documents

Transcript of Executive Board meeting 26 May 2004