The Central Bank still keeps interest rates unchanged
Á morgun rennur upp enn einn vaxtaákvörðunardagur Seðlabankans. mbl.is/Golli
The Monetary Policy Committee of the Central Bank of Iceland has decided to keep the bank's interest rate unchanged. The bank's main interest rate, interest on seven-day fixed deposits, will therefore remain at 9.25%.
The key interest rates have thus remained unchanged for a whole year.
This is stated in a statement from the Monetary Policy Committee.
"Inflation has risen marginally since the MPC’s last meeting, after having eased earlier this year. Underlying inflation remains high and price increases are widespread, even though the contribution of the housing component is still significant. Furthermore, inflation expectations are broadly unchanged and have remained above target.," the statement says.
A slowdown in inflation may take some time
It is stated that domestic demand has slowed over the past year in line with increased monetary restraint. However, there is still some tension in the national economy and it has not subsided much since the committee's May meeting.
It is also stated that the prospects are that it may take some time to achieve an acceptable reduction in inflation.
"The MPC is of the view that the current monetary stance is sufficient to bring inflation back to target, but persistent inflation and strong domestic demand call for caution. As before, monetary policy formulation will be determined by developments in economic activity, inflation, and inflation expectations.," the statement says.
