Norges Bank

1

Executive Board meeting13 December 2006

Norges Bank

2

Growth forecast OECD GDP. Annual change. Per cent

0

0.5

1

1.5

2

2.5

3

3.5

4

US Japan Euroarea

OECD

Forecast June

Forecast November

0

0.5

1

1.5

2

2.5

3

3.5

4

US Japan Euroarea

OECD

Forecast June

Forecast November

2006 2007

Source: Consensus Forecasts

Norges Bank

3

House prices1) and housing starts in the US Seasonally adjusted. 12-month change. 2) Jan 03 – Oct 06

-30

-20

-10

0

10

20

2003 2004 2005 2006

-30

-20

-10

0

10

20

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

Existing homesNew homes

Housing starts

Sources: Reuters EcoWin and Norges Bank

Norges Bank

4

0

10

20

30

40

50

60

70

80

80 82 84 86 88 90 92 94 96 98 00 02 04 06

0

10

20

30

40

50

60

70

80

1) Activity indicator for the business sector

Manufacturing

Non-manufacturing

US – ISM index1) Index values. Monthly figures. Seasonally adjusted

Sources: EcoWin / Institute for Supply Management and NBER

Norges Bank

5

Output gap3-year moving average. Annual figures. 1972 -2005

-6

-4

-2

0

2

4

1972 1976 1980 1984 1988 1992 1996 2000 2004

-6

-4

-2

0

2

4

US

Source: OECD EO Database

Germany1)

Japan

1) Estimated on the basis of data for West Germany in the period 1970-1990, Germany in the period 1991-2005.

Norges Bank

6

Oil price Brent Blend and futures prices USD per barrel. 3 January 2002 – 11 December 2006

10

20

30

40

50

60

70

80

90

2002 2003 2004 2005 2006 2007 2008 2009

10

20

30

40

50

60

70

80

90

11 December 2006

Sources: Telerate, IPE and Norges Bank

26 October IR 3/06

Norges Bank

7

CPI/HICP core 12-month change. January 1997 – October 2006

-2

-1

0

1

2

3

4

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

-2

-1

0

1

2

3

4

Source: EcoWin / National statistics

UK1)

US 2)

Euro area 1)

Japan 3)

1) HICP excl. energy, food, alcohol and tobacco 2) CPI excl. food and energy 3) CPI excl. fresh food.

Norges Bank

8Sources: Reuters and Norges Bank

0

1

2

3

4

5

6

Oct 03 Oct 04 Oct 05 Oct 06 Oct 07 Oct 08 Oct 090

1

2

3

4

5

6

US

Euro area 11 Dec 2006

IR 3/06 (31 Oct)

Sweden

UK

Actual and expected key ratesas per IR 3/06 and 11 December 2006

Norges Bank

9

5-year yield 5 years ahead1 January 2002 -11 December 2006

0

2

4

6

8

2002 2003 2004 2005 2006

0

2

4

6

8

Germany

US

Sources: Norges Bank and EcoWin

Norway

Norges Bank

10

3.0

3.5

4.0

4.5

5.0

5.5

6.0

Mar 07 Sep 07 Mar 08 Sep 08 Mar 09 Sep 09

3.0

3.5

4.0

4.5

5.0

5.5

6.0

Norges Bank's and the market's overnight deposit rate scenario

At 11 December 2006

Market 11 Dec 2006

Baseline scenario IR 3/06

Sources: Reuters and Norges Bank

Market 31 Oct 2006

Norges Bank

11

-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 rate differential (left-hand scale)

31 Oct 06(IR 3/06)

11 December 2006

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 – 12 December 06

Norges Bank

12

Various inflation indicators12-month change. Per cent

-2.5

-1.5

-0.5

0.5

1.5

2.5

3.5

4.5

5.5

2002 2003 2004 2005 2006

-2.5

-1.5

-0.5

0.5

1.5

2.5

3.5

4.5

5.5

Source: Statistics Norway

Weighted median

CPI-ATE20 per cent trimmed mean

CPI

Norges Bank

13

Expected consumer price inflation in 5 yearsPer cent. Quarterly figures. 2002 Q2 - 2006 Q4

0

1

2

3

4

Jun 02 Dec 02 Jun 03 Dec 03 Jun 04 Dec 04 Jun 05 Dec 05 Jun 06 Dec 060

1

2

3

4

Experts

Employers' organisations

Source: TNS Gallup

Employees' organisations

Norges Bank

14

Wage growth - wages paidGrowth on same quarter previous year. Per cent. 1999 Q1 – 2006 Q3

0

2

4

6

8

1999 2000 2001 2002 2003 2004 2005 2006 2007

0

2

4

6

8

Manufacturing

Transport and communications

Source: Statistics Norway

Retail trade

B&C

Commercial services and property management

Hotel and restaurant

Norges Bank

15

-2

-1

0

1

2

3

4

5

6

1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004

Old figuresNew figures

Mainland GDPNational accounts before and after the main revision.

Percentage annual growth. 1980 - 2005

Source: Statistics Norway

Norges Bank

16

2100

2200

2300

2400

1995 1997 1999 2001 2003 2005

2100

2200

2300

2400

Revised quarterly national accounts figures

Old quarterly national accounts figures

Employment - National accounts National accounts before and after main revision. In thousands.

1995 – 2005

Source: Statistics Norway

Norges Bank

17

-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 – October 2006 (C3 to Aug)

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

Money supply (M2)

Source: Norges Bank

Total credit (C3)

Norges Bank

18

House prices and household debt Change on same month/quarter previous year. Per cent.

January 2001 November 2006

-5

0

5

10

15

20

25

2001 2002 2003 2004 2005 2006

6

8

10

12

14

2001 2002 2003 2004 2005 2006

House prices Household debt (C2)

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

Real estate business

Norges Bank

19

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% 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

20

-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