Oil prices have also been influenced by international incidents, such as terror actions and Hurricanes Katrina and Rita that resulted in extensive damage both to installations that produce crude oil and natural gas in the Gulf of Mexico and to refineries in the area. Last summer, North Sea oil prices (Brent Blend) generally ranged between USD 55-60 per barrel, and in August prices were approaching USD 70 per barrel. Oil futures have also increased. Since the beginning of October, oil prices have fallen back somewhat, and the price of North Sea oil has been below USD 55 per barrel for the past few days. The price fall primarily reflects slower growth in oil demand in many markets. This may be a sign that oil prices have reached a limit in terms of how high prices can be without having a noticeable impact on oil demand and other economic activity. Rising or persistently high oil prices may gradually dampen growth among our most important trading partners. The slowdown may occur gradually, and will not necessarily be particularly pronounced. It appears that high oil prices are resulting in somewhat higher consumer price inflation among several of our trading partners than assumed earlier. There are clear signs that consumer prices are increasing more rapidly in the US, the UK and to a certain extent in the euro area. So far, high energy prices have had a limited impact on other consumer prices. Core inflation in the US and the euro area has shown little increase so far.
Jarle Bergo: Monetary policy and the cyclical situation Speech by Mr Jarle Bergo, Deputy Governor of Norges Bank (Central Bank of Norway), at a meeting with local authorities and the business community, Kapp, 23 November 2005. Please note that the text below may differ slightly from the actual presentation. The address is based on the assessments presented at Norges Bank’s press conference following the Executive Board’s monetary policy meeting on 2 November, Inflation Report 3/05 and on previous speeches. Charts in pdf-format can be found on the website of the Norges Bank. *  *  *  The economic situation The cyclical upturn in the Norwegian economy continues. Overall capacity utilisation in the economy has increased. After a period of very low consumer price inflation, there are prospects that inflation will again rise at a faster pace. Interest-rate setting since this spring has been oriented towards a gradual increase in the interest rate – in small, not too frequent steps – towards a more normal level. On the basis of the analysis in Inflation Report 3/05, this strategy still appears to provide a reasonable balance between the objectives of monetary policy. The reduction in Norges Bank’s key rate through 2003 and into 2004 resulted in low interest rates. At the beginning of the recovery, falling interest rates and expectations of low real interest rates ahead fuelled private consumption. A weaker krone exchange rate and the international recovery stimulated traditional merchandise exports.