Monetary Bulletin 2018/3
Monetary Bulletin 2018/3 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.
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Statement of the Monetary Policy Committee 29 August 2018
The Monetary Policy Committee (MPC) of the Central Bank of Iceland has decided to keep the Bank’s interest rates unchanged. The Bank’s key interest rate – the rate on seven-day term deposits – will therefore remain 4.25%. According to the Bank’s new macroeconomic forecast, published in the August Monetary Bulletin, GDP growth will measure 3.6% this year, as it did in 2017. This is slightly stronger than the Bank had forecast in May. The improved outlook stems primarily from a more favourable contribution from net trade, which outweighs weaker growth in domestic demand. GDP growth is still expected to ease, with weaker export growth and a less rapid increase in domestic demand. Developments in house prices and indicators from the labour market point in the same direction.
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Webcast of MPC Statement 29 August 2018
Link to a webcast where Governor Már Gudmundsson, Chairman of the Monetary Policy Committee, and Thórarinn G. Pétursson, Chief Economist and Member of the Monetary Policy Committee, presented the Committee´s interest rate decision and Monetary Bulletin.
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Working Paper No. 78: The common component of the CPI: A trendy measure of Icelandic underlying inflation
The Central Bank of Iceland has published Working Paper No. 78, "The common component of the CPI: A trendy measure of Icelandic underlying inflation", by Adalheidur Ó. Gudlaugsdóttir and Lilja S. Kro. The paper presents a new measure of underlying inflation in Iceland, the common component of the CPI. It is obtained from a factor model that is estimated using monthly data on individual subcomponents of the CPI.
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Survey of market expectations
The Bank’s market expectations survey was carried out on 13-15 August. A total of 30 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 21 market participants, giving a response ratio of 70%.
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