Temporary authorisation for withdrawals
According to Article 9 of the Act on the Treatment of Króna-Denominated Assets Subject to Special Restrictions, no. 37/2016, owners of offshore króna assets as these are defined in the Act are granted temporary permission to withdraw, on a voluntary basis, part or all of the funds from accounts subject to special restrictions in order to use the funds for foreign exchange transactions with the Central Bank of Iceland at a special reference exchange rate. The authorisation remains in effect until 1 November 2016. The reference exchange rate for these transactions is 220 krónur per euro, pursuant to Article 2, Item 10 of the Act.
More
Assessment of possible outflows upon capital account liberalisation
On August 17, 2016, the Government presented a bill to Parliament on the next steps in the liberalisation of capital controls (see link on next section). The Central Bank of Iceland has analysed possible capital outflows as these steps are taken. Outflows can be expected, owing to an increase in firms’ foreign direct investment and to firms’ and individuals’ interest in diversifying risk in their asset portfolios. However, the risk of substantial outflows is mitigated by a wide interest rate differential with abroad, a stronger economy in Iceland than in trading partner countries, low inflation, and trade-related capital inflows with the associated appreciation of the króna.
More
Market expectations survey
The Bank’s market expectations survey was carried out on 8-10 August. A total of 29 agents in the bond market, including banks, pension funds, mutual and investment funds, securities brokers, and licensed asset management firms were invited to participate. Responses were received from 19 market participants, giving a response ratio of 66%. The results of the survey indicate that market agents expect inflation to be lower in the next few months than in the last survey, which was carried out in May. According to the median response, survey participants expect twelve-month inflation to average 1.1% in Q3/2016, 1.6% in Q4/2016, and 2% in Q1/2017. This is about 1 percentage point lower than they expected in early May.
More
MPC Meeting with a Parliamentary committee on 29 August
The Act on the Central Bank of Iceland stipulates that the Monetary Policy Committee (MPC) of the Central Bank of Iceland shall submit to Parliament (Althingi) a report on its activities twice a year and that the contents of the report shall be discussed in the Parliamentary committee of the Speaker’s choosing. The thirteenth meeting will be held on 29 August 2016.
More
Monetary Bulletin 2016/3
Monetary Bulletin 2016/3 has been published on the Central Bank's website. Monetary Bulletin is published four times a year. The August issue contains updated inflation and macroeconomic forecasts and an abbreviated report on economic and monetary developments and outlook. Monetary Bulletin is also issued in Icelandic under the title Peningamál.
More