Central Bank of Iceland

November 15, 2017

Iceland’s seven-day term rate had been cut 25 basis points last month and earlier by 50 basis points in August 2016 and 25 bps each in May and June of this year. But a statement released after the latest review believes that the interest rate of 4.25% is appropriate for now. “The current monetary stance appears sufficient at present to keep inflation broadly at target. Whether this turns out to be the case in the coming term will depend on economic developments, including fiscal policy and the results of wage settlements.” The statement notes that Iceland’s output gap probably has crested, growth has slowed, and expected inflation is consistent with the central bank target. Officials see inflation aligning with target by the middle of next year and hovering around target thereafter.

Copyright 2017, Larry Greenberg. All rights reserved. No secondary distribution without express permission. 

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