Norges Bank Executive Board meeting 15 August 2007

Norges Bank Executive Board meeting 15 August 2007 1

Norges Bank Growth forecasts Consensus Forecasts GDP. Percentage change on previous year 2007 2008 Source: Consensus Forecasts

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

Norges Bank Equities Indices, 1 November 2006 = 100. 1 November 2006 – 14 August 2007 Euro area Norway Emerging economies US Japan Source: Reuters (Eco. Win) 4

Norges Bank Implied volatility from equity options Per cent. 1 January 2006 – 13 August 2007 Norway US Europe Sources: Reuters (Ecowin) and Oslo Stock Exchange 5

Norges Bank Credit premium on BBB-rated corporate bonds 5 -year maturity. Percentage points. 1 January 2004 – 13 August 2007 US Europe Source: Reuters (Eco. Win) 6

Norges Bank Credit spreads on bonds secured on subprime loans and ordinary mortgage loans Basis points. 19 January 2006 – 13 August 2007 Subprime 2007 H 1, BBB- Subprime 2006 H 2, BBB- Subprime 2006 H 1, BBBMBS (mortgage bonds), BBB - Source: Lehman Brothers 7

Norges Bank Price of hedging credit risk. 5 -year CDS prices Basis points. 1 July 2005 – 13 August 2007 European banks (Itraxx index) Dn. B NOR Sources: Bloomberg and Thomson Datastream 8

Norges Bank Price of hedging credit risk. 5 -year CDS prices Basis points. 3 October 2005 – 10 August 2007 Norske Skog (left -hand scale) Telenor Hydro Statoil Source: Thomson Datastream 9

Supply of liquidity from various central banks Central bank Date Amount supplied in local currency Interest rate Norges Bank Comment: 9 August Bank of Japan The Reserve Bank of Australia 10 August EUR 61. 05 bn 4. 08 per cent (average) Variable interest rate. Average interest rate on allotment of 4. 08 per cent. EUR 47. 67 bn 4. 07 per cent (average) Variable interest rate. Average interest rate on allotment of 4. 07 per cent. USD 12 bn + USD 12 bn From 5. 187 to First amount supplied as a 14 -day repo. Second amount was an ordinary O/N repo. According to the Financial Times, this is about twice as much as normal. 10 August USD 38 bn 5. 236 (19 bn) 5. 266 (16 bn) 5, 127 (3 bn) Three different repo tranches in the course of the weekend. Largest injection since the days following 11 September 2001. 9 and 10 August CAD 1. 69 bn 10 August Bank of Canada Largest single injection ever. ECB promised full allotment 9 August Federal Reserve 4. 0 per cent (fixed-rate loan) 13 August ECB EUR 94. 8 bn JPY 1000 bn 0. 553 per cent (average) O/N 13 August JPY 600 bn 0. 609 per cent (average) 1 -week repo 10 August AUD 4. 95 bn 9 – 13 August 9 August Twice the normal amount. 2. 6 per cent (overnight) and 2. 43 per cent (1 -week) Swiss National Bank Norges Bank 5. 33 per cent NOK 45 bn Has supplied a fair amount of liquidity. Reuters estimates the injection on Thursday 9 August at CHF 2 -3 bn. 4. 61 per cent Ordinary F-loan auction with allotment rate of 4. 61 per cent.

Norges Bank Key policy rates and forward rates As at previous monetary policy meeting and as at 13 August 2007 US Norway Euro area 13 August 2007 Market after MPR 2/07 (27 June) Sources: Reuters (Eco. Win), Bloomberg and Norges Bank 11

Norges Bank 3 -month interest rate differential and import-weighted exchange rate (I-44)1) January 2002 – December 2010 I-44 (left-hand scale) Average 1 – 13 August 2007 Weighted interest rate differential (right -hand scale) 1) Previous monetary policy meeting (27 June 2007) A rising curve denotes an appreciation of the krone. Sources: Bloomberg, Reuters (Eco. Win) and Norges Bank 12

Norges Bank Petroleum production in Norway In million barrels per day January 2000 – May 2007 Per cent Annual growth in total petroleum production (right-hand scale) Crude oil production (left-hand scale) Source: Norwegian Petroleum Directorate

Norges Bank Oil price Brent Blend and futures prices USD per barrel. 3. January 2002 -13 August 2007 Previous monetary policy meeting (26 June) 13 August 2007 Sources: Telerate, IPE and Norges Bank 14

Norges Bank Average prices for crude oil and natural gas Gas price USD/1000 Sm 3 1997 Q 1 – 2007 Q 31) Oil price USD per barrel Weighted average gas price Statoil/Hydro (left-hand scale) Brent Blend, USD/barrel (right-hand scale)1) Gas price UK (left-hand scale)1) Norwegian gas (left-hand scale) 1)Average daily figures to date in 2007 Q 3. Sources: Reuters (Eco. Win), Statistics Norway, Statoil, Norsk Hydro and Norges Bank 15

Norges Bank Various inflation indicators 12 -month change. Per cent. January 2002 – July 2007 CPI Weighted median CPI-ATE 20 per cent trimmed mean Source: Statistics Norway 16

Norges Bank CPI-ATE 1) Total and by supplier sector. Projections MPR 2/07 12 -month rise. Per cent. July 2003 – July 2007 Goods and services produced in Norway (0. 7)2) CPI-ATE Imported consumer goods (0. 3)2) 1) A further adjustment is made for the estimated effect of new maximum day-care rates in 2006. 2) Norges Bank's projections. Sources: Statistics Norway and Norges Bank 17

Norges Bank Labour market Employment Unemployment In 1000 s Per cent. Seasonally adjusted. QNA LFS unemployment Registered unemployed LFS 1) 1) The changes to the LFS have resulted in a break in the time series between 2005 and 2006. Sources: Statistics Norway and Norwegian Labour and Welfare Organisation (NAV) 18

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

Norges Bank Capacity utilisation in manufacturing - Business tendency survey Per cent. 1983 Q 1 – 2007 Q 2 Source: Statistics Norway 21

Norges Bank Enterprise sector credit 1) and liquid assets 2) 12 -month growth. Per cent. January 2000 – June 2007 (C 3 to April) Money supply (M 2) Total credit (C 3) 1) Mainland non-financial enterprises (C 3). enterprises' liquid assets (M 2). 2) Non-financial Source: Statistics Norway 22

Norges Bank Retail sales index and index of commodity consumption Volume. Seasonally adjusted. January 2000 – June 2007 Index of commodity consumption Retail sales index Sources: Statistics Norway and Norges Bank

Norges Bank House prices, household debt and the money supply Change on same month/quarter previous year. Per cent January 2001 – July 2007 (C 2 and M 2 June) House prices Real estate business Statistics Norway Debt and money supply C 2 M 2 Sources: Norwegian Association of Real Estate Agents, Association of Real Estate Agency Firms, Finn. no, ECON, Statistics Norway and Norges Bank 24

Norges Bank Household saving ratio and net lending as a share of disposable income 1, 2) 1980 – 2006 Saving Net lending 1) There is a break in the series between 1995 and 1996. for estimated reinvested share dividends for 2000 – 2005. 2) Adjusted Sources: Statistics Norway and Norges Bank

Norges Bank Projections in Monetary Policy Report 2/07 Per cent. 2005 Q 1 – 2010 Q 4 Key policy rate 30% 50% Output gap 70% 90% CPI-ATE Sources: Statistics Norway and Norges Bank 26

Monetary Policy Report 2/07 Norges Bank Monetary policy strategy - evaluation • The interest rate path presented in MPR 2/07 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 on economic developments. Given the inflation target, we will be mindful of the effects of higher interest rates on the krone exchange rate when inflation is low. • The key policy rate should lie in the interval 4½ – 5½% in the period to the publication of the next Report on 31 October 2007, conditional on economic developments that are broadly in line with the projections. 28

Norges Bank Executive Board meeting 15 August 2007 29