Charts for Inflation report 12004

Charts for Inflation report 1/2004 Summary Chart 1 Projections for CPI-ATE1) and the output gap2). Per cent 3 3 2 1 0 -1 -2 2002 1) CPI-ATE: 2 CPI-ATE 1 0 Output gap -1 -2 2003 2004 2005 2006 CPI adjusted for tax changes and excl. energy products 2)The output gap is a measure of the difference between actual and trend output. See box in IR 1/03 Sources: Statistics Norway and Norges Bank Chart 2 CPI-ATE. Total and by supplier sector. 12month rise. Per cent. Jan 2001 - Dec 2006 6 4 2 0 -2 -4 Goods and services produced in Norway 6 4 2 0 CPI-ATE Imported consumer goods -2 -4 -6 -6 2001 2002 2003 2004 2005 2006 2007 Sources: Statistics Norway and Norges Bank Chapter 1 1.1 The economic situation Chart 1.1 The output gap. Percentage deviation from trend mainland GDP. Annual figures. 1980-20031) 4 2 0 -2 -4 1980 1984 1988 1992 1996 2000 1)GDP figures for 2003 are based on projections. 4 2 0 -2 -4 Sources: Statistics Norway and Norges Bank Chart 1.2 Real interest rate after tax.1) Quarterly figures. 1985 Q1 - 2004 Q12). 9 3-month rate 9 6 3 0 -3 6 3 0 5-year rate -3 1985 1988 1991 1994 1997 2000 2003 money market rates deflated by the CPI excluding energy products up to 1995, Norges Bank`s estimates for the CPI adjusted for tax changes and excluding energy products from June 1995 to July 2000, then the CPI-ATE. The same deflator is used for 5-year government bond yields, but from 2001 Q2 the inflation target of 2.5 per cent is used 2) The 1) 3-month figure for 2004 Q1 is preliminary Sources: Statistics Norway and Norges Bank Chart 1.3 Employed persons according to LFS. In millions. Monthly figures. Jan 1998 – Dec 2003. Seasonally adjusted. 2.30 2.28 2.26 2.24 2.30 2.28 2.26 2.24 2.22 2.22 1998 1999 2000 2001 2002 2003 2004 Source: Statistics Norway Chart 1.4 Relative labour costs¹): Norway and trading partners. Deviation from average 1970 -2003. Per cent. Annual figures. 1970 -20042) 20 20 2004 15 10 5 0 -5 -10 -15 1970 1) 2) Projections Local currency 15 10 5 0 -5 Common currency -10 -15 1980 1990 2000 Hourly labour costs in manufacturing for wage growth in 2004. The projection for relative labour costs in common currency in 2004 is based on the assumption for the krone exchange rate in this report (TWI). Sources: TRCIS, Ministry of Finance and Norges Bank 1.2 Consumer price inflation Chart 1.5 CPI-ATE. Total1) and by supplier sector2). 12-month rise. Per cent. Jan 1999 - Jan 2004 6 6 4 2 0 -2 -4 -6 1999 1) Norges 2) Norges Goods and services produced in Norway 4 2 CPI-ATE 0 -2 Imported consumer goods -4 -6 2000 2001 2002 2003 2004 Bank's estimates up to and including July 2000, thereafter figures published by Statistics Norway Bank's estimates Sources: Statistics Norway and Norges Bank Chart 1.6 Prices for some imported consumer goods.1) 12-month rise. Per cent. Jan 2001 - Jan 2004 5 Cars (9) 5 0 Audiovisual equipment (3) 0 -5 -10 Clothing and footwear (7) -5 -10 -15 -15 2001 1) 2002 2003 2004 CPI adjusted for tax changes and excluding energy products. Percentage share of CPI-ATE in brackets Sources: Statistics Norway and Norges Bank Chart 1.7 CPI-ATE. Domestically produced goods1). 12-month rise. Per cent. Jan 1999 – Jan 2004 6 5 4 3 2 1 0 -1 1999 1) CPI 6 Goods produced in Norway which are influenced to only a limited extent by global market prices 5 4 3 2 Goods produced in Norway which are influenced by global market prices 1 0 -1 2004 2000 2001 2002 2003 adjusted for tax changes and excluding energy products. Norges Bank's estimates Sources: Statistics Norway and Norges Bank Chart 1.8 Consumer prices. Total and adjusted for tax changes and excluding energy products. 12month rise. Per cent. Jan 1999 - Jan 2004. 6 6 5 5 4 4 3 3 2 1 0 -1 -2 -3 1999 1) Norges CPI CPI-ATE1) 2 1 0 -1 -2 -3 2004 2000 2001 2002 2003 Bank's estimates up to and including July 2000, thereafter figures published by Statistics Norway Sources: Statistics Norway and Norges Bank Chart 1.9 Electricity prices. Index. 1 Jan 1998=100. Daily figures. 1 Jan 2001 – 4 Mar 2004. 350 300 250 200 150 100 50 2001 Electricity in the CPI Spot price including taxes and grid rental 350 300 250 200 150 100 50 2002 2003 2004 Sources: Statistics Norway, Nordpool, the Norwegian Water Resources and Energy Directorate and Norges Bank 1.3 Financial markets Chart 1.10. Interest rate expectations. Actual developments and expected key rate1) at 4 March 2004. Daily figures 6 UK 6 4 Norway Euro area 4 2 2 US 0 2003 1) 0 2004 2005 Based on interest rates on FRA and futures contracts adjusted for the estimated difference between 3-month money market rates and the key rate. Sources: Bloomberg, Reuters and Norges Bank Chart 1.11 Yield on government bonds with 10 year residual maturity. Daily figures. 1 Jan 2003 - 4 Mar 2004. 6 Norway 6 5 Germany 5 4 4 3 jan. 03 apr. 03 Source: Bloomberg US 3 okt. 03 jan. 04 jul. 03 Chart 1.12 International equity indices. 1 Jan 2003 = 100 Daily figures. 1 Jan 2003 – 4 Mar 2004. 180 Norway OBX 180 Germany DAX 160 140 120 100 160 140 120 US S&P 500 Japan NIKKEI 100 80 80 Jan-03 Apr-03 Jul-03 Oct-03 Jan-04 Source: Bloomberg Chart 1.13. Change in 3-month money market rates and effective exchange rates1). 23 Oct 2003 – 4 Mar 2004. 10% 8% Exchange rate change. Per cent nzd aud gbp eur usd chf jpy 6% 4% 2% 0% -2% -4% -6% -150 1) A positive sek nok cad -100 -50 0 50 100 Interest rate change. Basis points figure denotes a stronger exchange rate Sources: Bank of England and Bloomberg Chart 1.14. Individual exchange rate movements.1) Effective rates. Index. 1 Jan 2002=100. Daily figures. Jan 2002 – 4 Mar 2004. 140 130 120 110 100 90 80 EUR NOK GBP USD AUD NZD 140 130 120 110 100 90 80 70 70 Jan-02 Jul-02 Jan-03 Jul-03 Jan-04 1) A rising curve denotes a stronger exchange rate Source: Bank of England Chart 1.15. Exchange rate for NOK against EUR, USD and SEK.1) Daily figures. 1 Jan 2002 – 4 Mar 2004. 9.50 9.00 8.50 8.00 7.50 7.00 6.50 6.00 Jan-02 Jul-02 Jan-03 Jul-03 Jan-04 1) A rising 110 NOK/USD (left-hand scale) NOK/EUR (left-hand scale) 105 100 95 90 85 80 NOK per 100 SEK (right-hand scale) 75 curve denotes a weaker krone exchange rate Source: Bloomberg 1.4 Monetary Policy Chart 1.16 Projections for CPI-ATE and the output gap1) in IR 3/03. Per cent 3 3 2 CPI-ATE 2 1 0 Output gap 1 0 -1 -2 2002 1) The -1 -2 2003 2004 2005 2006 output gap is a measure of the difference between actual and trend output. See box in IR 1/03 Sources: Statistics Norway and Norges Bank Chart 1.17 CPI. Moving 10-year average (7 years back, current year and 2 years ahead). Per cent. 14 12 10 8 6 4 2 0 1979 1) The 14 12 CPI1) 10 8 Inflation target 6 4 2 1984 1989 1994 1999 0 2004 band around the CPI is the variation in the period, measured by +/- one standard deviation Sources: Statistics Norway and Norges Bank Chart 1.18 Strategy intervals for the sight deposit rate and actual developments. Nov. 2002 - Mar 2004. 8 7 6 5 4 3 2 1 0 nov. 02 mar. 03 Interval in Strategy Document 3/03 Sight deposit rate Interval in Strategy Document 3/02 Interval in Strategy Document 1/03 Interval in Strategy Document 2/03 8 7 6 5 4 3 2 1 jul. 03 nov. 03 0 mar. 04 Source: Norges Bank Chart 1.19 Interest rate expectations in the US Actual developments and expected key rate1). Daily figures 6 6 4 Key rate 16 Dec 03 4 23 Oct 03 19 Jan 04 2 2 0 1999 2000 2001 2002 2003 2004 2005 1) Based 0 on Fed Funds futures and Eurodollar futures adjusted for the estimated spread between the 3-month Libor and Fed Funds rates Sources: Bloomberg, Reuters and Norges Bank Chart 1.20 Interest rate expectations in the euro area. Actual developments and expected key rate1). Daily figures 6 Key rate 6 4 2 0 4 2 16 Dec 03 23 Oct 03 20 Jan 04 0 1999 2000 2001 2002 2003 2004 2005 on Euribor futures adjusted for the estimated spread between the 3-month Euribor and Refi rates 1) Based Sources: Bloomberg, Reuters and Norges Bank Chart 1.21 Import-weighted krone exchange rate1), sight deposit rate and 3-month interest rate differential against trading partners. Daily figures. 1 Jan 2002 – 4 Mar 2004 85 90 95 100 105 110 2002 1) A rising 10 I-44 (left-hand scale) Sight deposit rate (right-hand scale) Interest rate differential 3-month (right-hand scale) 8 6 4 2 0 -2 2003 2004 curve denotes a stronger krone exchange rate Source: Norges Bank Chapter 2 Chart 2.1 GDP growth in the US, Japan, the euro area and among Norway's trading partners combined. Quarterly growth. Per cent. 01 Q1 - 04 Q3. Seasonally adjusted 2 1 0 -1 -2 2001 US Trading partners Euro area Japan 2 1 0 -1 -2 2002 2003 Sources: EcoWin/US Department of Commerce, ESRI (JP) EURO-OP/Eurostat and Norges Bank Chart 2.2 Employment. 12-month growth. Per cent. Jan 1997 - Jan 2004. 4 3 2 1 0 -1 -2 -3 1997 US 4 Sweden 3 2 1 0 -1 -2 -3 UK Germany 1999 2001 2003 Sources: EcoWin, Bureau of Labor Statistics (US), Federal Statistical Office (DE), Office of National Statistics (UK) and SCB (SE) Chart 2.3 Structural budget balance. Per cent of GDP. Annual figures. 1995 - 20051). 2 US 2 0 Euro area 0 -2 -4 Japan -2 -4 -6 -8 2005 -6 -8 1995 1) 1997 1999 2001 2003 Projections for period 2003-2005 Source: OECD Chart 2.4 Annual wage growth1). Per cent. 1995 – 20052). 6 US 6 4 Euro area 4 2 0 Japan 2 0 -2 2005 -2 1995 1) 2) 1997 1999 2001 2003 Wage growth excluding public sector Projections for period 2003-2005 Source: OECD Chart 2.5 12-month rise in CPI. Per cent. Jan 2002 - Feb 2004 6 Ireland 6 4 Portugal Netherlands 4 2 Germany 2 0 jan. 02 0 jul. 02 jan. 03 jul. 03 jan. 04 Sources: EcoWin, EUR-OP/Eurostat, Federal Statistical Office (DE), Central Statistics Office (IRL) and Central Bureau of Statistics (NL) Chart 2.6 Prices for aluminium, nickel and copper in USD. Index. 2001=100. Daily prices. 1 Jan 2001 – 4 Mar 2004 300 300 200 Nickel 200 100 Copper Aluminium 100 0 2001 0 2002 2003 2004 Sources: London Metal Exchange and EcoWin Chart 2.7 GDP in China, Japan and Malaysia. Change on same quarter previous year. Per cent. 2001 Q1 - 2004 Q3 10 8 6 4 2 0 -2 -4 2001 2002 2003 Malaysia China 10 8 6 4 Japan 2 0 -2 -4 Sources: EcoWin, Statistics Japan, National Bureau of Statistics (CH) og Central Bank of Malaysia Chart 2.8 Oil price measured in USD and EUR per barrel. 14-day moving average. Daily prices. 18 Jan 2002 – 4 Mar 2004 35 30 25 20 15 Jan-02 Euro per barrel Dollar per barrel 35 30 25 20 15 Jul-02 Jan-03 Jul-03 Jan-04 Sources: EcoWin and Norges Bank Chart 2.9 Oil price1) in USD per barrel. Daily figures. 1 Jan 2001 – 4 Mar 2004. Futures prices from 4 Mar 2004. 35 30 25 20 15 2001 2002 2003 2004 2005 2006 1) 35 Oil price 30 Futures prices 4 Mar 04 25 20 15 Brent Blend Sources: International Petroleum Exchange and Norges Bank Chart 2.10 Consumer price inflation in the US, the euro area, Japan and among Norway's trading partners. Annual rise. 1995 - 20061) 4 US Euro area 4 2 Trading partners 2 0 Japan 0 -2 1995 1997 1999 2001 2003 2005 1) Projections for period 2004-2006 -2 Sources: OECD, EU Commission and Norges Bank Chapter 3 Chart 3.1 Assumption for the money market rate. Forward rate1) 2). Per cent 10 8 6 4 2 0 2001 1) 10 3-month money market rate 8 6 Forward rate 4 March 4 2 0 2002 2003 2004 2005 2006 3-month money market rates up to February 2004. 3-month forward rates are estimated using four money market rates and four government bond yields with different maturities as observed on 4 March. 2) The money market rate is normally about ¼ percentage point higher than the sight deposit rate Source: Norges Bank Chart 3.2 Assumption for the krone exchange rate (I44). Forward rates. Index1) 110 Import-weighted exchange rate, I-44 Forward rate 4 March 110 100 100 90 90 80 2001 2002 2003 2004 2005 2006 1) A rising 80 curve denotes a weaker krone exchange rate Source: Norges Bank Chart 3.3 Sight deposit rate, 5-year swap rate and implied one-year swap rate 4 years ahead1). Weekly figures. 7 Jan 2002 - 4 Mar 2004. 8 7 6 5 4 3 2 1 0 jan. 02 1) 8 Implied 1-year rate 4 years ahead 7 6 5 4 5-year rate Sight deposit rate 3 2 1 0 jul. 02 jan. 03 jul. 03 jan. 04 Implied 1-year rate 4 years ahead is estimated using 4- and 5-year swap rates. Since 2002, the 5-year swap rate has been ½ percentage point higher than government bond yields on average. Sources: Norges Bank and EcoWin Chart 3.4 Real growth in household disposable income and consumption. Annual figures. Per cent. 1990 - 2006. 10 8 6 4 2 0 1990 1993 1996 1999 2002 2005 Real income growth Real growth in consumption 10 8 6 4 2 0 Sources: Statistics Norway and Norges Bank Chart 3.5 Consumer confidence indicator.1) 1999 Q1 - 2004 Q1. Unadjusted figures. 45 30 15 0 Total Personal financial situation 45 30 15 0 Country's economic situation -15 -30 1999 1) -15 -30 2000 2001 2002 2003 2004 Provides an indication of the share with a positive assessment of the current situation and outlook for the future less the share with a negative assessment. Source: TNS Gallup Chart 3.6 Vacant office premises in Oslo, Asker and Bærum. Share of total real estate stock. 1991-20041) 12 10 8 6 4 2 0 1991 1) As 12 10 8 6 4 2 0 1994 1997 2000 2003 at February Source: Eiendomsspar AS Chart 3.7 Productivity growth and real growth in value added in commercial services. 2-year moving average. Annual figures. Per cent. 1972-2003. 20 16 12 8 4 0 -4 -8 -12 -8,7 Productivity (right-h. scale) Output (left-hand scale) 10 8 6 4 2 0 -2 -4 -6 1972 1976 1980 1984 1988 1992 1996 2000 Sources: Statistics Norway and Norges Bank Chart 3.8 Gross investment as a share of value added. Annual figures. 1985 -2006. 0.25 0.20 0.15 0.10 0.05 0.00 1985 1990 1995 2000 2005 Sources: Statistics Norway and Norges Bank Manufacturing and construction Average last 10 years Services and distributive trades 0.25 0.20 0.15 0.10 0.05 0.00 Chart 3.9 Relative labour costs¹): Norway and trading partners. Deviation from average 1970 -2003. Per cent. Annual figures. 1970 -20042) 20 20 2004 15 10 5 0 -5 -10 -15 1970 1) 2) Projections Local currency 15 10 5 0 -5 Common currency -10 -15 1980 1990 2000 Hourly labour costs in manufacturing for wage growth in 2004. The projection for relative labour costs in common currency in 2004 is based on the assumption for the krone exchange rate in this report (TWI). Sources: TRCIS, Ministry of Finance and Norges Bank Chart 3.10 Growth in local government income and activity and nominal growth in mainland GDP. Annual figures. Per cent. 1990-2003. 14 12 10 8 6 4 2 0 Income growth Activity growth Growth in mainland GDP 14 12 10 8 6 4 2 0 1990 1992 1994 1996 1998 2000 2002 Sources: The Technical Reporting Committee on Local Government Finance and Statistics Norway Chart 3.11 Local government surplus before loan transactions, net debt and net operating profit/ loss. Percentage of operating income. 1990-2003. 50 40 30 20 10 0 Surplus1) (right-hand scale) Net debt2) (left-hand scale) Net operating profit/loss (righthand scale) 12 8 4 0 -4 -8 1990 1992 1994 1996 1998 2000 2002 1) 2) Surplus before loan transactions Excluding claims on local government enterprises Sources: The Technical Reporting Committee on Local Government Finance Chart 3.12 Employment and labour force. In millions. Monthly figures. Jan 1999 - Dec 2003. Seasonally adjusted. 2.40 Labour force 2.40 2.35 2.30 Employment 2.35 2.30 2.25 2.20 1999 2.25 2.20 2000 2001 2002 2003 2004 Source: Statistics Norway Chart 3.13 Number of new vacancies advertised, per business day. Monthly figures. Jan 2000 - Feb 2004. Seasonally adjusted. 1200 900 600 300 0 2000 1200 900 600 300 0 2001 2002 2003 2004 Source: Directorate of Labour Chart 3.14 Change in employment on previous year. Per cent. Unemployment1) as a percentage of the labour force. Annual figures. 1980-2006. LFS unemployment (left-hand scale) 4 2 6 4 0 -2 -4 1980 1985 1990 1995 2000 2005 unemployment 2 Numbers employed (right-hand scale) 0 1) LFS Sources: Statistics Norway and Norges Bank Chapter 4 Chart 4.1 Assumption for the money market rate. Forward rate1) 2). Per cent. 10 8 6 4 2 0 2001 1) 10 3-month money market rate 8 6 Forward rate 4 March 4 2 0 2002 2003 2004 2005 2006 3-month money market rates up to and including February 2004. 3month forward rates are estimated using four money market rates and four government bond yields with different maturities as observed on 4 March. 2) The money market rate is normally about ¼ percentage point higher than the sight deposit rate. Source: Norges Bank Chart 4.2 Assumption for the krone exchange rate (I44). Forward rates. Index1). 110 Import-weighted exchange rate, I-44 Forward rate 4 March 110 100 100 90 90 80 2001 2002 2003 2004 2005 2006 1) A rising 80 curve denotes a weaker krone exchange rate Source: Norges Bank Chart 4.3 Projections for CPI-ATE and the output gap1). Per cent. 3 3 2 CPI-ATE 2 1 0 Output gap 1 0 -1 -2 2002 1) The -1 -2 2003 2004 2005 2006 output gap is a measure of the difference between actual and trend output. See box in IR 1/03 Sources: Statistics Norway and Norges Bank Chart 4.4 Projected external price movements for some imported consumer goods. Measured in trading partners' currencies. Quarterly figures. Index. 1991 Q1= 100. 1991 Q1 – 2003 Q3 110 100 90 80 70 Audiovisual equipment 110 Clothing Footwear 100 90 80 70 60 60 1991 1993 1995 1997 1999 2001 2003 Sources: EcoWin and Norges Bank Chart 4.5 Consumer goods imports from central Europe1) and China as a share of total consumer goods imports. Per cent. Annual figures. 199020032). 12 10 8 6 4 2 0 1990 1992 1994 1996 1998 2000 2002 Central Europe: Slovenia, Bulgaria, Czech Republic, Estonia, Latvia, Lithuania, Slovakia, Poland and Hungary 2) Figures for 2003 from January to November 1) 12 10 China 8 6 4 Central Europe 2 0 Source: Statistics Norway Chart 4.6 Consumer prices for audiovisual equipment in Norway and other countries. 12-month rise. Per cent. Jan 1995 - Jan 2004. 5 0 -5 -10 -15 1995 Sweden 5 0 -5 -10 Germany Norway -15 1997 1999 2001 2003 Sources: EcoWin and Statistics Norway Chart 4.7 Indicator of external price impulses to consumer goods measured in foreign currency. Historical developments and projections. Annual figures. 1995-2006 3 2 1 0 -1 -2 -3 1995 1997 1999 2001 2003 2005 Source: Norges Bank 3 2 1 0 -1 -2 -3 Chart 4.8 Prices for consumer goods imports in the CPI and in External Trade Statistics projected two quarters ahead, and I-44 projected three quarters ahead. 4-quarter rise. Per cent. 98 Q1 - 04 Q3 10 5 0 -5 -10 -15 1998 1) 10 Consumer goods imports in CPI2) I-44 5 0 Imported consumer goods in External Trade Statistics1) -5 -10 -15 2000 2002 2004 Our estimates: Clothing and accessories, footwear, furniture, food and beverages 2) Excluding audiovisual equipment and cars Sources: Statistics Norway and Norges Bank Chart 4.9 Prices for air travel. Adjusted for taxes. 12month rise. Jan 2001 - Jan 2004. 30 20 10 0 -10 -20 30 20 10 0 -10 -20 2001 2002 2003 2004 Sources: Statistics Norway and Norges Bank Chart 4.10 Annual wage growth1) and unemployment rate2). Per cent. Annual figures. 1993 -2006. Annual wage growth 6 4 6 4 Unemployment rate 2 0 1993 1995 1997 1999 2001 2003 2005 1) Average 2) 2 0 for all groups. Including cost of additional vacation days LFS Sources: Technical Reporting Committee on Income Settlements, Statistics Norway and Norges Bank Chart 4.11 Annual wage growth and unemployment. 2-year average 7 Annual wage growth (incl. cost of additional vacation days) 7 98-99 00-01 04-05 02-03 96-97 6 5 4 3 2 1 0 0 6 5 4 3 94-95 2 1 0 2 4 6 8 Registered unemployed and persons on labour market programmes as a percentage of the labour force Sources: Technical Reporting Committee on Income Settlements, Directorate of Labour and Norges Bank Chart 4.12 Expected consumer price inflation in 5 years. Per cent. Quarterly figures. 02 Q2 - 04 Q1 4 3 2 1 0 Jun-02 Employer organisations Employee organisations 4 3 2 1 0 Dec-02 Jun-03 Dec-03 Experts Source: TNS Gallup Chart 4.13 Expected consumer price inflation in 2 years. Per cent. Quarterly figures. 02 Q2 - 04 Q1 4 Employee organisations 4 3 Experts 3 2 1 0 Jun-02 Employer organisations 2 1 0 Dec-02 Jun-03 Dec-03 Source: TNS Gallup Chart 4.14 CPI-ATE. Total and by supplier sector. Historical developments and projections. 12-month rise. Per cent. Jan 2001 - Dec 2006 6 6 4 2 0 -2 -4 Goods and services produced in Norway 4 2 0 CPI-ATE Imported consumer goods -2 -4 -6 -6 2001 2002 2003 2004 2005 2006 2007 Sources: Statistics Norway and Norges Bank Chart 4.15 CPI-ATE. Historical developments and projections1). Seasonally adjusted 3-month moving average, annualised, and 12-month rise. Oct 2003 - Nov 2004 3 2 1 0 -1 -2 -3 Oct-03 1) 3 2 Historical 1 0 Projections -1 -2 -3 Jan-04 Apr-04 Jul-04 Oct-04 The columns show 3-month moving average. The curves show the 12-month rise. Sources: Statistics Norway and Norges Bank Chart 4.16 CPI and CPI-ATE. Historical developments and projections. 12-month rise. Per cent. Jan 2001 - Dec 2006 6 4 2 0 -2 2001 CPI-ATE CPI 6 4 2 0 -2 2002 2003 2004 2005 2006 Sources: Statistics Norway and Norges Bank Chart 4.17 Projections and uncertainty for CPI-ATE. 12-month rise. Per cent. Jan 2001 - Dec 2006 5 30% 50% 70% 90% 5 4 3 2 1 0 -1 2002 2003 2004 2005 2006 4 3 2 1 0 -1 2001 The bands in the fan indicate different probabilities for developments in the CPI-ATE. Sources: Statistics Norway and Norges Bank Charts for boxes and appendices Low external price impulses to the Norwegian economy Chart 1 Projected external price developments for some imported consumer goods. Measured in trading partners' currencies. Quarterly figures. Index. 91 Q1= 100. 91 Q1 - 03 Q3 120 110 100 90 80 70 60 1991 Audiovisual equipment Cars Other goods Furniture and household appliances 120 110 100 90 80 70 60 Footwear Clothing 1994 1997 2000 2003 Source: Norges Bank Chart 2 Foreign producer prices and a new indicator of external price impulses to consumer goods Measured in trading partners' currencies. Quarterly figures. Index. 1991 Q1=100. 1991 Q1 - 2003 Q3 120 115 110 105 100 95 1991 New indicator of external price impulses to consumer goods 120 115 110 105 100 95 1994 1997 2000 2003 Producer prices 25 traditional trading partners Source: Norges Bank Pass-through from the krone exchange rate to prices for imported consumer goods Chart 1 Estimated effects on price inflation for imported consumer goods in the CPI-ATE of a 10 per cent sustained strengthening of the importweighted krone exchange rate. Percentage points 1.00 0.50 0.00 -0.50 -1.00 -1.50 -2.00 -2.50 -3.00 Year 1 Year 2 Year 3 Year 4 New estimate Earlier estimate Source: Norges Bank Chart 2 Historical movements in prices for imported consumer goods and estimated effects of external prices, exchange rate movements and the output gap. Contribution in percentage points to 4-quarter rise. 2001 Q1 – 2003 Q4 2 1 0 -1 -2 Contribution from exchange rate -3 -4 -5 2001 2002 2003 Contribution from output gap Movements in prices for imported consumer goods Contribution from external prices 2 1 0 -1 -2 -3 -4 -5 Sources: Statistics Norway and Norges Bank Effect of the fall in interest rates on household income Chart 1 Interest rates on deposits and loans to households and non-profit institutions in domestic financial institutions. Estimated monthly series. Per cent. Jan 2002 - Dec 2003 10 Loans in banks 8 6 4 2 0 Jan-02 Loans in mortgage companies and life insurance 10 8 6 Key rate (sight deposit rate) Loans in government lending institutions Bank deposits 4 2 0 Jul-02 Jan-03 Jul-03 Source: Norges Bank The krone exchange rate and exchange rate expectations Chart 1 Effective exchange rates for Norway, Canada and Sweden1). Index. Week 1 1993 = 100. Week 1 1993 - Week 10 2004 140 130 120 110 100 90 80 Sweden Canada Norway 140 130 120 110 100 90 80 70 70 1993 1995 1997 1999 2001 2003 1) A rising curve denotes a stronger exchange rate Sources: Bank of England and EcoWin Chart 2 Effective exchange rates for Norway, Australia and New Zealand1). Index. Week 11993 = 100. Week 1 1993 - Week 10 2004 140 130 120 110 100 90 80 Australia Norway New Zealand 140 130 120 110 100 90 80 70 70 1993 1995 1997 1999 2001 2003 1) A rising curve denotes a stronger exchange rate Sources: Bank of England and EcoWin Chart 3 Real exchange rates. Deviation from average 1970 -2003. Per cent. Annual figures. 1970 -20041) 20 15 10 5 0 -5 -10 -15 -20 1970 1) Based 20 15 Relative prices 10 5 0 -5 -10 Relative labour costs 2004 -15 -20 1980 1990 2000 on projections for wage and price inflation for 2004. The krone exchange rate in 2004 is based on the assumptions in IR 1/04 (TWI) Sources: TRCIS, the Ministry of Finance, Statistics Norway and Norges Bank Chart 4 TWI and 5-year forward rate1). Daily figures. 1 Jan 93 – 4 Mar 04. 130 TWI forward rate Introduction of inflation targeting 130 120 110 120 110 TWI 100 90 1993 1995 1997 1999 2001 2003 1) A rising 100 90 curve denotes a weaker krone exchange rate Source: Norges Bank Chart 5 TWI and expected TWI one year ahead1). Monthly figures. June 1998 - Feb 2004 115 110 Expected TWI 115 110 105 TWI 105 100 95 90 1998 1999 2000 2001 2002 2003 1) A rising 100 95 90 curve denotes a weaker krone exchange rate. Expected TWI is based on Consensus Forecasts. Sources: Consensus Forecasts and Norges Bank Evaluation of Norges Bank’s projections for 2003 Chart 1 CPI-ATE projections made at different times. 4-quarter rise 3.00 2.50 2.00 1.50 1.00 0.50 Actual 3/01 1/02 3/02 1/03 2/03 3/03 2/02 3.00 2.50 2.00 1.50 1.00 0.50 0.00 0.00 mai. 01 jan. 02 sep. 02 mai. 03 jan. 04 Sources: Statistics Norway and Norges Bank Chart 2 CPI-ATE. Projections and actual developments. Total and by supplier sector. 4-quarter rise. Per cent 6 Goods and services produced in Norway 6 4 CPI-ATE 4 2 0 -2 -4 -6 2000 Imported consumer goods Projection IR 3/01 Actual 2 0 -2 -4 -6 2001 2002 2003 Sources: Statistics Norway and Norges Bank Annex 3: Strategy document Chart 1a Real interest rates after tax1). 1985 Q1 - 2003 Q3 9 3-month rate 9 6 3 5-year rate 6 3 0 -3 85 1) 0 -3 88 91 94 97 00 03 3-month rate deflated by CPI excluding energy products up to 1995. Norges Bank's estimates for the CPI adjusted for tax changes and excluding energy products from 1995 to July 2000, then CPI-ATE. The same deflator is used for 5-year government bond yields, but from 2001 Q2 the inflation target of 2.5 per cent is used. Sources: Statistics Norway and Norges Bank Chart 1b Import-weighted exchange rate (I-44) and trade-weighted exchange rate index1). Monthly figures. Jan 1971 - Oct 2003 110 100 TWI 110 100 90 80 70 71 74 77 80 83 86 89 92 95 98 01 04 curve denotes a weaker krone exchange rate 90 80 70 1) A rising I-44 Source: Norges Bank Chart 1c Real exchange rate. Deviation from average 1970-2002. Annual figures. 1970 - 2003. Per cent 20 15 10 5 0 -5 -10 -15 70 73 76 79 82 85 88 91 94 97 00 03 1) Average 20 Relative labour costs 15 10 5 0 Relative prices October1) -5 -10 -15 exchange rate at 23 Oct 2003 Sources: TRCIS, Ministry of Finance, Statistics Norway and Norges Bank Chart 1d CPI-ATE. Total and distributed by imported and domestically produced goods and services1). 12-month rise. Per cent 6 4 2 0 -2 -4 Goods and services produced in Norway 6 4 CPI-ATE 2 0 Imported consumer goods -2 -4 -6 -6 Jan-01 Jul-01 Jan-02 Jul-02 Jan-03 Jul-03 1) Norges Bank's estimates Sources: Statistics Norway and Norges Bank Chart 2a Assumption for money market rates. Quarterly figures. 2002 Q1 - 2006 Q4 8 6 4 2 0 2002 2003 2004 2005 2006 Source: Norges Bank IR 2/03 Forward rate 23 October 8 6 4 2 0 Chart 2b Assumption for the krone exchange rate (I44). Quarterly figures. 2002 Q1 - 2006 Q4 85 85 90 IR 2/03 90 95 Forward rate 23 October 95 100 2002 100 2003 2004 2005 2006 2007 Source: Norges Bank Chart 3 Projected CPI-ATE and output gap with forward interest rate and forward exchange rate. Per cent 3 2 CPI-ATE (monthly figures) 3 2 1 0 Output gap (annual figures) 1 0 -1 2002 -1 2003 2004 2005 2006 Sources: Statistics Norway and Norges Bank Chart 4 Taylor rate and expected key rates1). Quarterly figures. 2003 Q3 - 2004 Q4 7 6 5 4 3 2 1 Expected key rate among trading partners Expected key rate in Norway Taylor rate 7 6 5 4 3 2 1 0 0 Sep-03 Dec-03 Mar-04 Jun-04 Sep-04 Dec-04 The expected key rate is estimated on the basis of 3-month FRA rates in Norway and among trading partners on 23 October 03. 1) Source: Norges Bank Appendices 4 and 5 3-month money-market rate and sight deposit rate. Monthly figures. Jan 1995 - Feb 2004 10 8 6 4 2 0 1995 3-month money market rate Sight deposit rate 10 8 6 4 2 0 1996 1997 1998 1999 2000 2001 2002 2003 2004 Source: Norges Bank 3-month rates in the US, the euro area and Japan. Per cent. Monthly figures. Jan 1995 - Feb 2004 7 6 5 4 3 2 1 0 1995 1) 7 6 5 Euro area1) 4 3 US Japan 2 1 0 2004 1996 1997 1998 1999 2000 2001 2002 2003 Theoretical ECU rate up to December 1998 Source: Norges Bank 115 110 105 100 95 90 Trade-weighted exchange rate index and import-weighted exchange rate I-44. Monthly figures. Jan 1995 - Feb 2004 Trade-weighted exchange rate index, TWI (1990=100) 115 110 105 100 95 Import-weighted exchange rate, I-44 (1995=100 90 85 85 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 Source: Norges Bank The credit indicator (C2), credit to households and total credit to the non-financial private sector and municipalities, mainland Norway (C3). 12-month rise. Per cent. Monthly figures. Jan 1997 - Jan 2004 15 Credit to households 15 10 C2 10 5 C3 mainland Norway 5 0 1997 0 1998 1999 2000 2001 2002 2003 2004 Source: Norges Bank Assumption for money market rate. Forward rate. Per cent 10 8 6 4 2 0 2001 Forward rate 4 March 3-month money market rate 10 8 6 4 2 0 2002 2003 2004 2005 2006 Source: Norges Bank Assumptions for the krone exchange rate (I-44). Forward rates. Index 110 Import-weighted exchange rate, I-44 Forward rate 4 March 110 100 100 90 90 80 2001 2002 2003 2004 2005 2006 Source: Norges Bank 80