The Central Bank of Iceland on Wednesday raised its rates by 0.25 percentage point, to 6%, the fifth monetary tightening since May, against a backdrop of price increases, however, slower than expected.
Inflation picked up slightly in October, at 9.4%. The rise in prices is widespread and core inflation has continued to rise, the Central Bank said in a statement.
According to her, inflation should average around 9.4% in the fourth quarter of 2022 and gradually decrease to around 4.5% in the fourth quarter of 2023.
The Central Bank also points out that the Icelandic krona has depreciated since its last meeting in October.
Growth forecasts on the rise
It notes, however, that inflation rose less rapidly than estimated in August, due to a rapid change in the housing market and a greater drop in oil prices and air fares. this autumn.
Short-term inflation forecasts have improved but the longer-term outlook remains broadly unchanged, she said.
Meanwhile, Sedlabanki forecasts gross domestic product (GDP) growth of 5.6% for 2022.
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For 2023, the Central Bank is revising its forecasts upwards with GDP growth of 2.8% instead of 1.9% as announced in August, thanks to a rise in demand possibly faster than expected.