EXECUTIVE BOARD MEETING 23 JANUARY 2019

Monetary Policy Report 4/18, overall picture

-1

0

1

2

3

-1

0

1

2

3

2012 2014 2016 2018 2020

2

-3-2-1012

-3-2-1012

2012 2014 2016 2018 2020

0

1

2

3

4

0

1

2

3

4

2012 2014 2016 2018 2020859095100105110

859095

100105110

2012 2014 2016 2018 2020

Output gap Policy rate

Inflation (CPI-ATE) Exchange rate index (I-44)

Sources: Statistics Norway and Norges Bank

PMI for Norway’s trading partners

3

Manufacturing and services PMI. 25 main trading partners. Export weights. January 2010 – December 2018

Source: Thomson Reuters

45

50

55

60

45

50

55

60

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Manufacturing PMI

Services PMI

Global growth

4 1) Projections to 2020. Sources: IMF and Norges Bank

Historical average and projections from the IMF. Percent. 2016 – 20171)

3

3.2

3.4

3.6

3.8

4

3

3.2

3.4

3.6

3.8

4

2016 2017 2018 2019 2020

World Economic Outlook, April 2018World Economic Outlook, October 2018World Economic Outlook update, January 2019Average 2009 - 2017

Inflation for selected trading partners

5

Twelve-month change. Percent. January 2010 – November/December 2018

Core inflation Headline CPI

-1

0

1

2

3

4

5

-1

0

1

2

3

4

5

2010 2012 2014 2016 2018

USEuro areaUKSweden

-1

0

1

2

3

4

5

-1

0

1

2

3

4

5

2010 2012 2014 2016 2018

USEuro areaUKSweden

Source: Thomson Reuters

Policy rates

6

Policy rates and estimated forward rates1). Percent. 21 January 2019 (solid line) and MPR 4/18 (broken line)

1) Forward rates are based on Overnight Index Swap (OIS) rates. Sources: Bloomberg, Thomson Reuters and Norges Bank

-1

-0.5

0

0.5

1

1.5

2

2.5

3

-1

-0.5

0

0.5

1

1.5

2

2.5

3

2012 2013 2014 2015 2016 2017 2018 2019 2020 2021

US UK

Euro area Sweden

Money market rates for Norway’s trading partners

7

Three-month money market rates for Norway’s trading partners. Percent. 2012 Q1 – 2018 Q41)

1) Projections to 2021 Q4. Sources: Thomson Reuters and Norges Bank

0

0.5

1

1.5

2

0

0.5

1

1.5

2

2012 2014 2016 2018 2020

MPR 4/18

21 January 2019

Long-term government bond yields

8

Ten-year government bonds. Percent. 1 January 2016 – 21 January 2019

Source: Bloomberg

-1

0

1

2

3

4

-1

0

1

2

3

4

Jan-16 Jul-16 Jan-17 Jul-17 Jan-18 Jul-18 Jan-19

US UKGermany NorwayItaly

MPR 4/18

Global equity markets

9

Index. 1 January 2016 = 100. 1 January 2016 – 21 January 2019

Sources: Bloomberg and Norges Bank

80

100

120

140

160

180

80

100

120

140

160

180

Jan-16 Jun-16 Nov-16 Apr-17 Sep-17 Feb-18 Jul-18 Dec-18

US

China

Europe

UK

Norway

MPR 4/18

Crude oil spot and futures prices

10

USD/barrel. Daily data. January 2010 – January 20191)

1) Futures prices at 21 January 2019 (broken lines) to December 2021. Sources: Thomson Reuters and Norges Bank

0

20

40

60

80

100

120

140

0

20

40

60

80

100

120

140

2010 2012 2014 2016 2018 2020

Spot prices

Futures prices

Futures prices at MPR 4/18

Import-weighted exchange rate index (I-44)

11

2 January 2016 – 21 January 2019

Source: Norges Bank

98

102

106

110

98

102

106

110

Jan-16 May-16 Sep-16 Jan-17 May-17 Sep-17 Jan-18 May-18 Sep-18 Jan-19

I-44Projection MPR 4/18Average Q1

Stronger NOK

MPR 4/18

Three-month money market premium

12

Percentage points. 1 January 2015 – 21 January 20191)

0

0.2

0.4

0.6

0.8

1

0

0.2

0.4

0.6

0.8

1

Jan-15 Jan-16 Jan-17 Jan-18 Jan-19 Jan-20 Jan-21

Norwegian money market premium

Projection MPR 4/18

1) Projections to December 2021. Sources: Bloomberg and Norges Bank

MPR 4/18

GDP mainland Norway

13

Monthly and three-month growth. Seasonally adjusted. Percent. February 2016 – March 20191)

1) Projections for 2018 Q4 – 2019 Q1. Sources: Statistics Norway and Norges Bank

-1

-0.5

0

0.5

1

1.5

-1.0

-0.5

0.0

0.5

1.0

1.5

Feb-16 Aug-16 Feb-17 Aug-17 Feb-18 Aug-18 Feb-19

Monthly growth Three-month growth Quarterly projections MPR 4/18

Private consumption

14

Private consumption for households and non-profit organisations. Three-month growth. Seasonally adjusted. Percent. June 2016 – November 2018

Source: Statistics Norway

-2

-1

0

1

2

-2

-1

0

1

2

Jun-16 Dec-16 Jun-17 Dec-17 Jun-18

Total consumption

Services consumption

Goods consumption

Consumer confidence

15

Consumer Confidence Index (CCI) and Kantar TNS Consumer Sentiment Index. Net values. January 2008 – December 2018

Sources: ForbrukerMeteret from Opinion and TNS Kantar

-30

-20

-10

0

10

20

30

40

50

-15

-10

-5

0

5

10

15

20

25

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Consumer Confidence Index (CCI), Opinion (l.h.s.)Cosumer Sentiment Index, TNS Kantar (r.h.s.)Average 2007 Q2 - 2018 Q4

House prices

16

Percent. January 2015 – December 2018

Sources: Eiendomsverdi, Finn.no and Real Estate Norway

2015 2016 2017 2018-10

-5

0

5

10

15

-2

-1

0

1

2

3

Seasonally adjusted monthly change (l.h.s.)Twelve-month change (r.h.s.)

Credit growth

17

C2. Percent. January 2015 – November 20181) Non-financial enterprises,

mainland Norway Households

1) Projections to March 2019. Sources: Statistics Norway and Norges Bank

4

5

6

7

8

4

5

6

7

8

2015 2016 2017 2018 2019

Twelve-month change in C2Projections MPR 4/18

0

4

8

12

0

4

8

12

2015 2016 2017 2018 2019

Twelve-month change in C2Projections MPR 4/18

Norwegian Petroleum Directorate projections

18

Petroleum investment. Annual change. Percent. 2012 – 20171)

1) Projections to 2021. Sources: Norwegian Petroleum Directorate, Statistics Norway and Norges Bank

-20

-15

-10

-5

0

5

10

15

20

-20

-15

-10

-5

0

5

10

15

20

2012 2013 2014 2015 2016 2017 2018 2019 2020 2021

Norwegian Petroleum Directorate MPR 4/18

Unemployment

19

As a percentage of the labour force. Seasonally adjusted. January 2012 – October / December 20181)

1) Projections to January / March 2019. Sources: Norwegian Labour and Welfare Administration (NAV), Statistics Norway and Norges Bank

0

1

2

3

4

5

6

0

1

2

3

4

5

6

2012 2013 2014 2015 2016 2017 2018 2019

NAV unemployment Gross unemployment

LFS unemployment Projections MPR 4/18

Inflation

20

Twelve-month change. Percent. January 2012 – December 20181)

1) Projections to March 2019. Sources: Statistics Norway and Norges Bank

0

1

2

3

4

5

0

1

2

3

4

5

2012 2013 2014 2015 2016 2017 2018 2019

CPICPI-ATEProjections MPR 4/18

CPI-ATE by supplier sector

21

Twelve-month change. Percent. January 2012 – December 20181)

-2

-1

0

1

2

3

4

5

6

-2

-1

0

1

2

3

4

5

6

2012 2013 2014 2015 2016 2017 2018 2019

Imported consumer goodsDomestically produced goods and servicesProjections MPR 4/18

1) Projections to March 2019. Sources: Statistics Norway and Norges Bank

CPI and indicators of underlying inflation

22

Twelve-month change. Percent. January 2002 – December 2018

1) The band shows the highest and lowest values for CPIM, CPIXE, 20% trimmed mean, weighted median, CPI-XV and CPI common. Sources: Statistics Norway and Norges Bank

-2

0

2

4

6

-2

0

2

4

6

2002 2004 2006 2008 2010 2012 2014 2016 2018

Indicators¹⁾ CPI-ATE CPI

SAM1) projections for the CPI-ATE

23

1) System for Averaging short-term Models. 2) Projections to 2019 Q2. Sources: Statistics Norway and Norges Bank

Four-quarter change. Percent. 2014 Q1 – 2018 Q42)

0

1

2

3

4

0

1

2

3

4

2014 2015 2016 2017 2018 2019

CPI-ATE

Projections MPR 4/18

SAM MPR 4/18

SAM 10 January

EXECUTIVE BOARD MEETING 23 JANUARY 2019