Norges Bank 11 Executive Board meeting 25 June 2008

Norges Bank 22 Source: Statistics Norway Weighted median CPI-ATE 1) 20 per cent trimmed mean CPI Consumer prices 12-month change. Per cent. January 2004 – May ) CPI adjusted for tax changes and excluding energy products.

Norges Bank 3 CPI, CPI-ATE 1) and CPIXE 2) 12-month change. Per cent. January 2004 – December ) CPI-ATE CPIXE Sources: Statistics Norway and Norges Bank CPI 1) CPI adjusted for tax changes and excluding energy products. 2) CPI adjusted for tax changes and excluding temporary changes in energy prices 3) Forecasts for June - December 2008

Norges Bank 4 Domestically produced goods and services (0,7) Imported consumer goods (0,3) CPI-ATE Sources: Statistics Norway and Norges Bank CPI-ATE 1) Total and by supplier sector 2). 12-month change. Forecasts from PPR 1/08 (broken lines). Per cent. January 2004 – May ) CPI adjusted for tax changes and excluding energy products. 2) Norges Bank’s estimates.

Norges Bank 5 Expected inflation 2 years ahead Expected inflation 5 years ahead 1) Average of expectations of employer/employee organisations and academics and experts in the financial industry Expected CPI inflation 2 and 5 years ahead 1) Per cent Q2 – 2008 Q2 Source: TNS Gallup

Norges Bank 6 3-month real interest rate 1), real key policy interest rate 1), 10-year real interest rate 2) and the normal real interest rate in Norway 3) Per cent Q1 – 2008 Q2 4) 1) Deflated by the 12-quarter moving average (centred) of inflation measured by the CPI. Projections for the CPI from this Report form the basis for this estimate. 2) 10-year swap rate deflated by the inflation target. 3) Calculations may indicate that the normal real interest rate for Norway is currently in the lower end of the interval 2½ - 3½%. 4) For 2008 Q2 the average of daily figures 1 April 2008 to 20 June 2008 is used. Interval for normal real interest rate Sources: Statistics Norway and Norges Bank 3-month real interest rate 10-year real interest rate Key policy real interest rate

Norges Bank 7 Norges Bank's regional network: Capacity constraints Per cent. January 2005 – May 2008 Capacity 1) Labour 2) 1) Share reporting that they would have some or considerable difficulty in accommodating an increase in demand. 2) Share who respond that the supply of labour will be a limiting factor for output/turnover. Source: Norges Bank

Norges Bank 8 Mainland GDP 1) Four-quarter change. Seasonally adjusted. Per cent Q1 – 2008 Q4 2) SAM MPR 2/08 Mainland GDP Sources: Statistics Norway and Norges Bank 1) In terms of market value 2) Projections for 2008 Q Q4.

Norges Bank 9 1) In USD 23 June 08 Sources: Thomson Reuters, Statistics Norway and Norges Bank 10 Mar 08 (MPR 1/08) 28 May 08 Oil price (Brent Blend) in USD per barrel Futures prices (broken lines) Price indices 1) for Norwegian exports in NOK 2002= Q1 – 2008 Q1

Norges Bank 10 Investment statistics for the petroleum industry. Estimated and actual investment (current prices). In billions of NOK – 2009 Source: Statistics Norway Estimate published same year

Norges Bank 11 1) In USD International commodity prices Index, week = 100. Week – Week Non-food agriculturals Food Industrials All items Metals Sources: Thomson Reuters, Statistics Norway and Norges Bank

Norges Bank 12 UK Euro area US Japan Sweden Source: Thomson Reuters Russia Brasil India 1) China 1) Wholesale prices Growth in consumer prices abroad 12-month change. Per cent. January 2002 – May 2008

Norges Bank 13 Kilder: Thomson Reuters og Norges Bank Norway US Euro area 23 June 2008 Market after the previous executive board meeting (28 May 2008) UK Key policy rates and forward rates 28 May and 23 June 2008

Norges Bank May June month interest rate differential and import-weighted exchange rate (I-44) 1) January 2002 – December 2011 I-44 (left-hand scale) Weighted interest rate differential (right-hand scale) 1) A rising curve denotes an appreciation of the krone Source: Thomson Reuters and Norges Bank

Norges Bank 15 Mean January – June ) Relative consumer prices Relative wage costs Real exchange rate Deviation from mean – Per cent Average ”oil age” 1) Data for 2008 based on observations to 23 June Sources: Statistics Norway, Technical Reporting Committee on Income Settlements, Ministry of Finance and Norges Bank

Norges Bank 16 Mortgage market Equities Source: Thomson Reuters Credit market Credit derivatives market Bear Stearns European financials (Itraxx-index) Merrill Lynch JP Morgan Chase Norway OSEBX Europa Stoxx S&P 500 US, BBB Europe, BBB UK Germany Spain Denmark Ireland Norway

Norges Bank 17 Norway 2) US UK Euro area Difference between three-month money market rates and key policy rate expectations in the market 1) Historical and ahead. Percentage points. At 23 June ) The expected key rate is measured by the Overnight Indexed Swap (OIS). For Norway, the estimates are based on key policy rate expectations in the market. Sources: Bloomberg, Thomson Reuters and Norges Bank

Norges Bank 18 Source: Statistics Norway Total interest margin Lending margin Deposit margin Banks’ 1) total interest margin Divided into deposit and lending margin 2). Percentage points. End of quarter. 97 Q4 – 08 Q1 1) All banks in Norway 2) Deposit and lending margins are measured against 3-month money market rates

Norges Bank 19 Key policy rate, money market rate 1) and banks’ lending rate on new loans 2) In per cent. 3 May 2007 – 23 June 2008 Mortgage rate Money market rate Sources: Norsk familieøkonomi AS and Norges Bank 1) 3-month NIBOR 2) Interest rates on new mortgage loans for NOK 1 million within 60% of purchase price with floating interest rate. Figures for the 20 largest banks, weighted according to market share. Key policy rate

Norges Bank 20 Source: Norges Bank MPR 1/08 MPR 2/08 90% 70% 50% 30% Key policy rate in MPR 1/08 and MPR 2/08 with fan chart from MPR 1/08 Per cent Q1 – 2011 Q4

Norges Bank 21 90% 70% 50% 30% Baseline scenario in MPR 2/08 Sources: Statistics Norway and Norges Bank Output gap CPIXE 1) CPI Key policy rate 1) CPIXE: CPI adusted for tax changes and excluding temporary fluctuations in energy prices

Norges Bank 22 Key policy rate Strategy interval 1/05 3/04 2/05 3/05 1/06 2/06 3/06 2/07 1/07 3/07 MPR 2/08 1/08 MPR 1/08 2/08 Source: Norges Bank