Norges Bank 1 Executive Board meeting 30 May 2007

Norges Bank Growth forecasts Consensus Forecasts GDP. Percentage change on previous year Source: Consensus Forecasts

Norges Bank GDP - China and India Growth on same quarter previous year Source: Reuters China India

Norges Bank 4 House prices 1) and housing starts in the US Seasonally adjusted. 12-month change 2) January 2003 – March 2007 (Housing starts to April) 1) Median price for dwellings 2) 3-month moving average Housing starts Existing dwellings New dwellings Sources: Reuters and Norges Bank

Norges Bank 5 Oil price Brent Blend and futures prices USD per barrel. 3 January 2002 – 28 May May 2007 Sources: Telerate, IPE and Norges Bank Previous monetary policy meeting (24 April 2007)

Norges Bank 6 Equities Indices,1 January 2006 = January 2006 – 28 May 2007 Euro area US Japan Norway Sources: Reuters Emerging economies

Norges Bank Sources: Reuters, Bloomberg and Norges Bank US Euro area 25 May 2007 Previous monetary policy meeting (24 April 2007) Sweden UK Key policy rates and forward rates As at previous monetary policy meeting and as at 25 May

Norges Bank Sources: Bloomberg and Norges Bank I-44 (left-hand scale) Weighted interest rate differential (right-hand scale) 25 May ) 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 2010 Average 1-25 May Previous monetary policy meeting (24 April 2007)

Norges Bank 9 Norway's terms of trade 2000 Q1 – 2007 Q1 Sources: Statistics Norway and Norges Bank Overall terms of trade Terms of trade traditional goods and services

Norges Bank 10 Inflation and interval for underlying inflation 1) 12-month change. Per cent. January 2002 – April 2007 Highest indicator Lowest indicator CPI Sources: Statistics Norway and Norges Bank 1) Highest and lowest indicator of the CPI-ATE, a weighted median and a trimmed mean of the sub-indices in the CPI.

Norges Bank 11 Sources: Statistics Norway and Norges Bank Goods and services produced in Norway (0.7) 1) 1) Norges Bank's projections. Imported consumer goods (0.3) 1) CPI-ATE CPI-ATE Total and by supplier sector. 12-month change. Per cent June 2004 – April 2007

Norges Bank 12 Sources: Statistics Norway and Norwegian Labour and Welfare Organisation (NAV) Labour market 1) The changes to the LFS have resulted in a break in the time series between 2005 and LFS unemployment Registered unemployed Employment In 1000s Unemployment Per cent. Seasonally adjusted LFS 1) QNA

Norges Bank 14 Average monthly real wage growth in Poland 12-month growth Unemployment rate Monthly figures. January 2001 – April 2007 Total Construction Source: Reuters Estonia Poland Latvia Lithuania Slovakia Norway

Norges Bank 15 Manufacturing output index Volume index. Seasonally adjusted 3-month moving average and trend Source: Statistics Norway 3-month moving average Trend

Norges Bank 16 Indicator of resource shortage - business tendency survey for manufacturing Per cent Q1 – 2007 Q1 Source: Statistics Norway

Norges Bank 17 Source: Statistics Norway Annual growth in mainland enterprise sector credit, liquid assets and investment level In billions of current NOK. Monthly figures. January 1997 – March ) Gross fixed capital formation. Mainland Norway excl. dwellings and public sector. Total last four quarters Credit (C3) Fixed investment 1) Liquid assets (M2)

Norges Bank 18 Source: TNS Gallup TNS Gallup's household trend indicator Trend Q3 – 2007 Q2

Norges Bank 19 Retail sales index 12-month growth. 3-month moving average. Per cent January 2000 – February 2007 Sources: Statistics Norway and Norges Bank

Norges Bank 20 Household net lending and net financial wealth to income ratio Last four quarters Q Q4 Source: Norges Bank Net lending 2) Net financial wealth to income ratio 1) 1) Net assets as a share of disposable income. 2) In billions of NOK. Adjusted for estimated reinvested share dividends for 2000 – Net lending-60.9bn + Net revaluations92.2bn = Net change in assets31.2bn

Norges Bank 21 House prices and household debt Change on same month/quarter previous year. Per cent January 2001 – April 2007 (C2 March) House prices Household debt (C2) Sources: Norwegian Association of Real Estate Agents, Association of Real Estate Agency Firms, Finn.no, ECON, Statistics Norway and Norges Bank Real estate business Statistics Norway

Norges Bank 22 Housing starts and housing investment Total over 12 months/4 quarters January 2000 – March 2007 (Housing starts 2006 Q4) Sources: Statistics Norway and Norges Bank 1) Constant 2004 prices. Housing starts, in thousands (left-hand scale) Housing investment, in billions of NOK 1) (right-hand scale)

Norges Bank 23 Commercial building starts Area (1000 m 2 ) 3-month moving average. January 2002 – March 2007 Sources: Statistics Norway and Norges Bank

Norges Bank Sources: Reuters and Norges Bank Market 25 May 2007 Baseline scenario MPR 1/07 Key policy rate in baseline scenario and estimated forward rates 1) Per cent. At 25 May ) A credit risk premium and a technical difference of 0.20 percentage point have been deducted to make the forward rates comparable with the key policy rate. Market previous monetary policy meeting (24 April 2007) 24 Market cut-off MPR 1/07 (9 March 2007)

Norges Bank 3-month real interest rate 1) and the normal real interest rate Per cent Q Q1 Interval for normal real interest rate Real interest rate Source: Norges Bank 25 1) 3-month money market rate deflated by the 12-quarter moving average (centred) of inflation measured by the CPI. Projections for the CPI from MPR 1/07 form the basis for this estimate.

Norges Bank 26 Baseline scenario in Monetary Policy Report 1/07 30% 50% 70% 90% Output gap CPI-ATE Key policy rate CPI Sources: Statistics Norway and Norges Bank

Norges Bank 27 Monetary policy strategy The interest rate path presented in Monetary Policy Report 1/07 reflects the Executive Board's trade-off between bringing inflation up to target and stabilising developments in output and employment. In the light of this trade-off, the interest rate will be increased gradually so that we can assess the effects of interest rate changes and other new information about economic developments. The key policy rate should lie in the interval 4 – 5% in the period to the publication of the next Report on 27 June 2007, conditional on economic developments that are broadly in line with the projections. Monetary Policy Report 1/07

Norges Bank 28 Executive Board meeting 30 May 2007