New information since the December 2000 Inflation Report does not provide a basis for a substantial change in the assessment of developments in the Norwegian economy. Quarterly national accounts indicate somewhat lower growth in household demand than expected in the second half of 2000. On the other hand, capacity utilisation in the Norwegian economy remains high. The labour market is tight. There appears to be somewhat greater optimism in the manufacturing sector.
Price inflation is high.
Underlying price inflation, i.e. price inflation excluding indirect taxes, electricity and petrol prices, was 2.8 per cent. House prices may have risen again in January after a decline towards the end of 2000. Credit supply remains high, although the growth rate slowed somewhat in December. In the light of recent trends in the economy and the current balance of risks, the probability that the next change in interest rates will be a reduction is the same as the probability of an increase.