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Executive Board meeting 15 October 2008

Executive Board meeting 15 October 2008. 1. Price of credit default insurance Large international banks. 5-year CDS prices. Basis points. 2 July 2007 – 13 October 2008. Morgan Stanley. UBS. Bank of America. Goldman Sachs. iTraxx Europe index. DnB NOR. JPMorgan Chase. Source: Bloomberg.

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Executive Board meeting 15 October 2008

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  1. Executive Board meeting15 October 2008 1

  2. Price of credit default insuranceLarge international banks. 5-year CDS prices. Basis points. 2 July 2007 – 13 October 2008 Morgan Stanley UBS Bank of America Goldman Sachs iTraxx Europe index DnB NOR JPMorgan Chase Source: Bloomberg

  3. Effective yields on covered bonds5-7 years average term to maturity. Percentage points5 January 2004 – 10 October 2008 UK Denmark Spain Norway1) Ireland Germany 1) The regulation relating to covered bonds entered into force on 01.06.07 Sources: DnB NOR Markets, Bloomberg and Thomson Reuters

  4. Difference between money market rates andexpected key rates1)Percentage points. 5-day moving average. 2 July 2007 – 13 October 2008 1) The expected key rate is measured by the Overnight Index Swap (OIS). For Norway, the estimates are based on key policy rate expectations in the market. Sources: Bloomberg, Thomson Reuters and Norges Bank

  5. EquitiesTotal return. 1 July 2007 = 100. 1 July 2007 – 13 October 2008 Emerging markets, MSCI Norway, OSEBX US, S&P 500 Japan, Topix Europe, Stoxx Source: Thomson Reuters

  6. Implied volatility from equity optionsPer cent. 1 January 2005 – 13 October 2008 Norway Europe US Sorces: Thomson Reuters and Oslo Børs

  7. Global Risk IndexExpected volatility between USD, EUR and JPY in per cent1)1 January 2005 – 13 October 2008 1) GRI is based on implied volatility derived from prices on 3-month currency options between EUR, USD and JPY (equally weighted). Source: Bloomberg

  8. Total risk index1)Daily observations. 1 January 2000 - 13 October 2008 1) Compound indicator based on arithmetic mean of seven financial market components Sources: Thomson Reuters and Norges Bank

  9. 3-month interest rate differentialand import-weighted exchange rate (I-44)1)January 2002 – December 2011 I-44 (right-hand scale) 13 October 2008 13 October 2008 25 June 2008 Weighted interest rate differential (left-hand scale) 1) A rising curve denotes an appreciation of the krone. Sources: Thomson Reuters and Norges Bank

  10. Implied volatility in the Norwegian exchange marketBased on 1-month currency option prices. 1 January 2005 – 13 October 2008 Source: Bloomberg

  11. International commodity prices1) Index. Week 1 2002 = 100 Week 1 2002 – week 40 2008 Oil price (Brent Blend) in USD per barrelFutures prices (broken lines) 20.06.08 (MPR 2/08) 13.10.08 1) I XDR Sources: Thomson Reuters, Statistics Norway and Norges Bank

  12. Net exports from G-7 to emerging economiesContribution to GDP growth in the G-7 countries . Percentage units. 1992 Q1 – 2008 Q2 Source: OECD

  13. Growth forecasts WEO1)GDP. Percentage change on previous year 2008 2009 1) World Economic Outlook Sources: IMF and Norges Bank

  14. Growth forecasts WEO1)GDP. Percentage change on previous year 2008 Q4 2009 Q4 1) 1) 1) 1) 1) IMF forecasts from July and October Source: IMF

  15. Rise in consumer prices abroad12-month change. Per cent. January 2002 – September 2008 Russia Brazil US Sweden UK India1) China Japan Euro area 1) Wholesale prices Source: Thomson Reuters

  16. 13 October 2008 Market after MPR 2/08 (25 June) Key rates and forward ratesPer cent. 1 June 2007 – 13 October 2008 UK US Euro area Sweden Sources: Thomson Reuters og Norges Bank

  17. Consumer prices12-month change. Per cent. January 2002 – September 2008 CPI CPIXE1) 17 1)CPIXE: CPI adjusted for tax changes and excluding temporary changes in energy prices Sources: Statistics Norway and Norges Bank

  18. National Budget 2009 • A structural, non-oil deficit of NOK 92 billion in 2009 equals the expected real return on the Fund. The Government Pension Fund – Global estimated at NOK 2300 billion at the start of 2009 • The deficit increases by 14 billion 2009-NOK from 2008 to 2009, or 0.7 percentage point of trend GDP • Nominal underlying growth in spending in the national budget of 7.8 per cent in 2009. Nominal growth in mainland GDP estimated at 5.7 per cent

  19. Manufacturing production indexSeasonally adjusted volume index. 3-month moving average. January 2002 – August 2008 Capital goods Intermediate goods Trend Consumer goods 3-month moving average Source: Thomson Reuters

  20. Actual and expected productionManufacturing, building and construction Increasing Increasing Suppliers to petroleum industry Exports Production for home market Building and construction Market outlook Source: Norges Bank and Norges Bank Regional Network

  21. Extra round of phone callsNorges Bank’s regional network • Private consumption • Decline in travel and restaurant sectors in recent weeks • Investment • Sharp decline in building starts second half of 2008 • Pronounced slowdown in commercial real estate in recent months • Weaker investment prospects in retail trade and services • Employment • Decline in employment in building and construction in past couple of months and prospects for further decline • Decline in employment in some service industries supplying the household sector • Increased supply of labour

  22. Index of commodity consumption Volume. Seasonally adjusted. January 2005 – April 2009 Source: Statistics Norway

  23. Household net lendingTotal past four quarters. In billions of NOK. 2003 Q1 – 2008 Q2 Financial sector accounts (FINSE) National accounts National accounts, excluding reinvested dividends Sources: Statistics Norway and Norges Bank

  24. Unemployed Percentage of labour force. Seasonally adjusted. January 1998 – August 2008 Registered unemployed and on labour market programmes LFS unemployment Registered unemployed Sources: Statistics Norway, Norwegian Labour and Welfare Administration (NAV) and Norges Bank

  25. Employment (LFS)In 1000s of persons. Seasonally adjusted. June 2006 – July 2008 Source: Statistics Norway

  26. Property prices and creditGrowth from same month/half-year previous year. Per cent. Credit to enterprises1) Credit to households House prices Sources: Norwegian Association of Real Estate Agents, Association of Real Estate Agency Firms, Finn.no, ECON Pöyry, Statistics Norway and Norges Bank 1) Non-financial enterprises mainland Norway.

  27. Key policy rate, money market rate1) and banks’ lending rate on new loans2) Per cent. 1 July 2007 – 14 October 2008 Money market rate Mortgage rate Key policy rate 1) 3-month NIBOR. 2)Interest rates on new mortgage loans of NOK 1 million within 60% of purchase price with floating interest rate. Figures for the 20 largest banks, weighted according to market share. Sources: Norsk familieøkonomi AS and Norges Bank

  28. Key policy rate in the baseline scenario and estimated forward rates Per cent. 2008 Q4 – 2010 Q4 Market after publication of MPR 2/08 (25 June) Baseline scenario MPR 2/08 Market 13 October 2008 Sources: Thomson Reuters and Norges Bank

  29. Key policy rate Strategy interval 2/08 MPR 2/08 1/08 3/07 2/07 1/07 3/06 2/06 1/06 3/05 2/05 1/05 3/04 29 Source: Norges Bank

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