the conduct of monetary policy · 19.05.2020 · the conduct of monetary policy governor Øystein...
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THE CONDUCT OF MONETARY POLICY
GOVERNOR ØYSTEIN OLSEN
19 May 2020
A historically deep declineGrowth in mainland GDP.1) Percent
21) Projections for 2020 from Monetary Policy Update, May 2020.
Sources: Staistics Norway and Norges Bank
-12
-10
-8
-6
-4
-2
0
1921 1931 1940 1944 1989 2009 2020
Abrupt and deep decline in the global economy
80
85
90
95
100
105
110
115
2014 2016 2018 2020 2022
Projections monetarypolicy meeting 6 May
Projections 11 March
GDP trading partners.1) Index. 2019 Q1 = 100
31) Projections from Monetary Policy Report 1/20 and Monetary Policy Update, May 2020.
Sources: Refinitiv Datastream and Norges Bank
Marked fall in oil pricesUSD per barrel. Futures price at 15 May 2020
4Source: Refinitiv Datastream
0
10
20
30
40
50
60
70
80
90
2018 2019 2020 2021 2022 2023
Spot price
Futures price
Substantial krone depreciation
100
105
110
115
120
125
130
135
Jan-18 Jul-18 Jan-19 Jul-19 Jan-20
Import-weighted exchange rate index (I-44)
5Source: Norges Bank
Money market turbulenceMoney market rate (three-month Nibor) and policy rate. Percentage points
6
0.0
0.5
1.0
1.5
2.0
2.5
3.0
Dec-19 Jan-20 Feb-20 Mar-20 Apr-20 May-20
Policy rate
Money market rate
Sources: Bloomberg og Norges Bank
Policy rate reduced to zero
Monetary policy meeting, 6 MayNorges Bank’s policy rate
The outlook and the balance of risks
imply a very expansionary monetary
policy stance
The policy rate is reduced to zero
percent and will most likely remain at
today’s level for some time ahead
The Committee does not envisage
making further policy rate cuts
7
0
0.5
1
1.5
2
2012 2014 2016 2018 2020
Source: Norges Bank
Activity will pick up gradually
600
650
700
750
800
2012 2014 2016 2018 2020 2022
Projections monetarypolicy meeting 6 May
Projections 11 March
Quarterly mainland GDP.1) In billions of NOK
81) Projections from Monetary Policy Report 1/20 and Monetary Policy Update, May 2020.
Sources: Statistics Norway and Norges Bank
Unemployment is expected to decline Registered fully unemployed as share of the labour force.1) Percent
91) Projections from Monetary Policy Report 1/20 and Monetary Policy Update, May 2020.
Sources: Norwegian Labour and Welfare Administration (NAV) and Norges Bank
0
1
2
3
4
5
6
7
8
9
2012 2014 2016 2018 2020 2022
Projections monetarypolicy meeting 6 May
Projections 11 March
Prospects for low wage growth Annual change.1) Percent
101) Projections from Monetary Policy Report 1/20 and Monetary Policy Update, May 2020.
Sources: Statistics Norway and Norges Bank
-1
0
1
2
3
4
5
2012 2014 2016 2018 2020 2022
Projections monetarypolicy meeting 6 May
Projections 11 March
Temporarily higher inflation
0
1
2
3
4
2012 2014 2016 2018 2020 2022
Projections monetarypolicy meeting 6 May
Projections 11 March
Inflation target
CPI-ATE.1) Four-quarter change. Percent
111) Projections from Monetary Policy Report 1/20 and Monetary Policy Update, May 2020.
Sources: Statistics Norway and Norges Bank
THE CONDUCT OF MONETARY POLICY
GOVERNOR ØYSTEIN OLSEN
19 May 2020