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1 Monetary policy assessments and strategy.
A section from the book "Financial Stability" is presented. It focuses on the economic condition in Norway. The authors report that consumer price inflation (CPI) is poor and stable even though economic growth in the country remains high. They add that consumer prices display variations every month. In addition, economic growth is strong and the high level of activity may remain longer. Growth among Norway's trading partners has been stronger than projected.
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2 Economic developments.
A section from the book "Financial Stability" is presented. It focuses on developments in the global economy. The authors claim that high demand for goods and services can be partly due to the decline in oil prices since summer 2006. They note that high international activity has helped employment growth, which increased household optimism and supported private consumption. Several charts that offer data related to economic development are presented.
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An analysis of banks' problem loans.
This section of the book "Financial Stability" provides an analysis of problem loans of banks in Norway. According to the authors, the problem loans consist of non-performing loans and other particularly doubtful loans. They show a close relationship between problem loans and recorded loan losses. In addition, the authors offer a forecast for the problem loans. They claim that the problem loans associated with households will increase.
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Annex 1: Boxes 2002-2007.
An appendix containing the titles of articles published in the report "Financial Stability" from 2002 to 2007 is presented.
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Annex 2: Other published material on financial stability at Norges Bank.
An appendix of other published material on financial stability at Norges Bank is presented.
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Annex 3: Statistics.
An appendix of statistics of the financial performance of the financial services industry in Norway as of June 2007 is presented.
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Annex I: Regional network.
A section from the book "Financial Stability" is presented. It offers information on Norges Bank's regional network. The authors note that the primary purpose of the regional network is to gain updated information on the condition of the Norwegian economy. A list of institutions chosen for the report is presented. A summary of contract rounds since "Inflation Report 3/06" is provided. Another list of the enterprises and organizations that have been interviewed for the report is also presented.
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Annex II: Statistics, charts and detailed projections.
Several charts and detailed projections related to the economic condition in Norway are presented.
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Balancing risks.
The article discusses the author's views regarding the economic condition in Norway. The author states that inflation has not recovered in spite of growth in output and employment. He says that competition is holding inflation back and is contributing to an efficient use of resources. He adds that monetary policy operates with a delay. He announces the new title of "Inflation Report."
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Boxes 2002-2007.
A list of several economic reports released from 2002 to 2007 is presented. The list includes the reports "Evaluation of Norges Bank's Projections for 2006," issued in January 2007, "What are the Factors Behind the Rise in Oil Futures Prices?," issued in February 2004, and "Evaluation of Inflation Reports in Countries With Inflation Targets," issued in February 2003.
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Challenges.
Chapter 3 of the book "Financial Stability" is presented. This chapter discusses the challenges facing the financial services industry in Norway in 2007. According to the authors, liquidity risk, market risk and credit risk at banks remain relatively low in the short term. They claim that satisfactory capital ratios indicate that banks are well poised to meet a situation with higher loan loss. In addition, the authors look at the conditions that may mitigate the risk of financial stability.
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Competition and prices.
A section from the book "Financial Stability" is presented. It discusses competition and prices in the Norwegian economy. The authors report that inflation has been poor in recent years, partly displaying low import prices, high productivity growth and moderate wage growth. Norges Bank argues that increased competition in product markets may have held back inflation. In a survey of Norges Bank's regional network, 58% of companies asserted that competition has increased in the past 2-3 years.
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Conclusions -- monetary policy strategy.
The article discusses the Executive Board's assessment and strategy regarding the monetary policy in Norway. The author notes that there are several factors indicating that inflation will gradually rise. He adds that there are also indications that consumer price inflation may reach the target as from 2008. He says that the interest rate will be increased so that the effects of interest rate changes and other information regarding economic developments can be evaluated.
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Considerable demands on risk management.
This article looks at the role of the financial services industry in the economy of Norway in 2007. According to the author, the long upturn in the economy has contributed to strong growth in corporate and household income and unusually low loan losses at banks. He claims that the introduction of new loan products may have provided additional impetus to lending growth. In addition, the author explains the impact of new capital adequacy rules.
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Developments in energy and commodity markets.
A section from the book "Financial Stability" is presented. It reports the developments in the energy and commodity markets in Norway. The average oil price in 2007 is 56 U.S. dollar (USD) per barrel. Oil inventories increased along with high production in Organization of Petroleum Exporting Countries (OPEC) and non-OPEC, while demand decreased. Several charts that offer information related to economic activities are presented.
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Evaluation of projections for 2006.
A section from the book "Financial Stability" is presented. It presents an evaluation of economic projections in Norway for 2006. The authors report that growth in output and employment was strong than expected, which made the estimate for the output gap in 2006 revised. In addition, consumer inflation was 2.3%. Meanwhile, mainland gross domestic product (GDP) growth in 2006 was higher than projected. Growth in all the main components of mainland GDP was higher in 2006 than in 2005.
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Financial institutions.
Chapter 1 of the book "Financial Stability" is presented. This chapter examines the condition of financial institutions in Norway in 2007. The author monitored financial institutions, securities markets and payment systems in order to identify any trends that may weaken financial stability. They found that among the largest financial conglomerates in Norway, banking activities are dominant. They showed that banks play a central part in providing credit and executing payments.
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International experience of turnarounds in the housing market.
This section of the book "Financial Stability" discusses the experience of turnarounds in the housing market. According to the authors, house prices have fluctuated around a rising trend in most Organization for Economic Co-operation and Development countries since the 1970s. They claim that house price inflation has slowed markedly since the peak in 1999 in the Netherlands. They also show that house price inflation in Great Britain has declined substantially since the peak in 2002-2003.
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Low household saving.
This section of the book "Financial Stability" examines the low household saving ratio in Norway. The authors discuss the relation between the household saving ratio and economic disturbances. They indicate the causes of the low ratio, including low interest rates. They claim that low interest rates make it more attractive to increase consumption and less attractive to save.
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Low share of fixed-rate loans in the household sector.
This section of the book "Financial Stability" discusses the trends in fixed-rate loans in the housing market in Norway in 2007. According to the authors, the share of household fixed-rate loans is the country. They claim that most fixed-rate loans have a residual fixed-rate period of less than five years. In addition, the authors look at the difference in prices for fixed-rate and floating-rate loans.
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Monetary policy since the previous report.
A section from the book "Financial Stability" is presented. It discusses the monetary policy of Norway since the "Inflation Report 3/06." The report asserted that more pronounced trade shifts, increased competition, weaker global growth or a stronger krone could lead to a lower inflation. In addition, the report implied that the low interest rate or a further depreciation of the krone might result to a higher-than-projected increase in output and inflation.
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Norges Bank's reports on financial stability.
The article introduces the content of the report "Financial Stability" which focused on an outlook for the financial system in Norway.
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Projections in Inflation Report 3/06 and Monetary Policy Report 1/07.
A section from the book "Financial Stability" is presented. It presents an analysis of the projections in "Inflation Report 3/06" and "Monetary Policy Report 1/07." Developments in the Norwegian economy since the report on inflation are discussed. They include growth in mainland gross domestic product (GDP) in the 2004-2006 period. The effects of the report on the interest rate path are also mentioned. A detailed account of assessments and interest rate development is provided.
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Recent price developments.
A section from the book "Financial Stability" is presented. It offers information on recent price developments in Norway. In February 2007, the consumer price index (CPI) had a 0.8% increase. The authors note that inflation adjusted for tax changes and excluding energy products was higher than what was expected. Prices for domestic goods and services had an increase of 2.0%. Prices for services had an increase of 4.2%. Several charts that show data on recent price developments are presented.
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Summary.
This section of the book "Financial Stability" looks at the state of the financial services industry in Norway in 2007. The authors begin with an outlook for the financial system. They claim that the system seems to be robust to economic disturbances. They then explain the downside risks to the favorable prospects for global growth. In addition, the authors discuss the conditions that may mitigate the risk of financial instability.
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The macro-financial environment.
Chapter 2 of the book "Financial Stability" is presented. This chapter focuses on the trends in the macro-financial environment in Norway in 2007. According to the authors, a large share of banks' assets consists of loans to Norwegian enterprises and households. They claim that developments in these sectors are crucial for losses and results of banks. In addition, the authors observe that developments in securities markets influence financial institutions.
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Uncertainty surrounding wage growth ahead.
A section from the book "Financial Stability" is presented. It focuses on the wage growth in Norway. The authors report that corporate profitability in the country has been stable and unemployment rate has declined markedly. They mention the marked increase in labor inflows from the new European Union (EU) member states from 2004 as an important factor that has prevented wage growth. They add that labor inflows have also had a negative impact on wage growth.
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Will the global economy be affected by a slowdown in the US?
A section from the book "Financial Stability" is presented. It discusses whether the global economy will be affected by a slowdown in the U.S. The authors note that economic decline in the U.S. can spread to other countries through trade, financial markets and expectations. The integration of China and other emerging economies into the expansion of the world economy is an important driving force, in spite of poor growth in the U.S.
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