The interest rate has been reduced by 5 percentage points and is now approximately the same as among our trading partners. The krone has depreciated by about 12 per cent over the past year, and has returned to the level prevailing in the summer of 2001 and is in line with the average for the 1990s. Chart 20. After-tax real interest rates Quarterly figures. Per cent 10  10  8  8  3-month rate  6  6 10-year rate  4  4  2  2  0 1990  0 1992  1994  1996  1998  2000  2002  2004  Sources: Statistics Norway and Norges Bank  Monetary policy is expansionary now. This is reflected in low after-tax real interest rates. A long-term real yield on 10-year bonds can be estimated at about 1 per cent. We have adjusted the nominal interest rate for expected inflation. The short-term real interest rate is estimated at 1½ per cent. We have then adjusted the figure for actual inflation. The fall in nominal interest rates in 2003 has also reduced household net interest expenses. This has increased household purchasing power considerably. Chart 21. Labour costs in Norway compared with trading partners Index.
1990=100  110  110  105  105  100  100  Local currency  95  95 Common currency  90  90 1990 1992 1994 1996 1998 2000 2002 2004  Sources: TRCIS, Ministry of Finance and Norges Bank  14  BIS Review 11/2004  The fall in the value of the krone over the past year has strengthened the Norwegian business sector. The business sector is, however, still feeling the effects of a sharp rise in labour costs over a period of several years. Relative labour costs measured in a common currency are in line with the level prevailing in 1990, but approximately 10 per cent higher than in the mid-1990s. The internationally exposed sector has been scaled back. Those companies that are currently operating may be in a better position to bear the high wage level. Nevertheless, costs may limit activity and employment. Growth in the Norwegian economy picked up again through the summer of 2003. In the period ahead, solid growth in household income, subdued consumer price inflation and low interest rates will provide the conditions for high growth in private consumption. There is optimism in the building and construction sector. High petroleum investment is also supporting activity while mainland business investment has been low for a long period. The number of persons employed began to increase in the summer of 2003 and unemployment stabilised.