It is more likely that the next change will involve a reduction rather than an increase. If developments are in line with expectations, any further reduction will, however, be smaller than the reductions implemented so far. 13  BIS Review 121/1999  Chart 14 Technical assumptions  • Oil price gradually falls to 120 kroner per barrel • 2 per cent real growth in public expenditure this year • Krone exchange rate 8.30 kroner per euro • Short term interest rates follow market expectations  Legg inn filadresse her  Chart 15 Technical assumption concerning money market rates  IR 99/3  6 4  IR 99/2  4  2  2  0  0  1999  2000  2001  Source: Norges Bank Legg inn filadresse her  BIS Review 121/1999  6  14  Norges Bank has changed its procedures this year. The goal is to achieve predictability and transparency. Each month the Executive Board of the Bank discusses monetary policy. The dates for the monthly meetings are announced ahead of time. Changes in interest rates will normally be decided at these meetings. After each meeting there is a press release at 2 p.m. and a press conference at 4 p.m. The quarterly Inflation Report presents analyses that provide a basis for the Bank’s conduct of monetary policy. Additional information from Norges Bank in English, such as articles and speeches, is available on Norges Bank’s website www.norges-bank.no. 11.
Growth is anticipated to be low also next year and approach trend growth in 2001. Demand growth could be higher than expected, which would contribute to maintaining the pressure in the labour market. Employment is still high and near capacity level, while we see a tendency towards higher unemployment in sectors such as the construction and engineering industries. Chart 13 Unemployment rate. Per cent 6  6  5  5  4  4  3  3  2  2  1  1  0  0 80  82  84  86  88  90  92  94  96  98  Source: SSB Legg inn filadresse her  Inflation is expected to remain at around 2% for the next two years, with inflation rates of 2¼% this year, 2% next year and 1¾% in 2001. Chart 14 shows the key technical assumptions underlying Norges Bank’s projections. Short-term interest rates are assumed to move in line with market expectations, as reflected in forward rates in September (Chart 15). According to market expectations, the differential against European rates will narrow from the current level of a little more than 3 percentage points to around 1 percentage point at the end of 2001. The krone exchange rate is assumed to be NOK 8.30 against the euro throughout the projection period. Developments, as indicated by Norges Bank’s analyses, imply that there is little room for further decreases in interest rates.