The expected slowdown in world economic growth now appears to have commenced. Short-term statistics for the US now provide growing evidence of more moderate growth. In order to prevent the economy from slowing down too fast, the Federal Reserve lowered its target for the federal funds rate by half a percentage point to 6 per cent on 3 January. The recent fall in oil prices will also contribute to reducing the risk of a sharp turnaround internationally. The situation in the Norwegian economy has not changed markedly since the December 2000 Inflation Report.
Price inflation is high.
The underlying rise in prices, ie excluding indirect taxes and changes in electricity prices and adjusted for the revision of the house rent index, stood at 2.8 per cent. On average, prices rose by 3.1 per cent from 1999 to 2000. The underlying rise in prices was 2.9 per cent. If changes in petrol prices are also excluded, price inflation was 2.4 per cent. The labour market remains tight.