Thursday, June 16, 2011

Iceland Central Bank Holds Rate at 4.25%

Iceland's Sedlabanki maintained its seven-day collateral lending rate unchanged at 4.25%, and kept the deposit rate at 3.25% and overnight lending rate at 5.25%.  The Bank said: "Given recent announcements, the outlook is for a more expansionary fiscal stance than previously forecast," and that "tighter monetary policy may become warranted in the near term".

At its April meeting the Sedlabanki also held the 7-day collateral lending rate unchanged at 4.25%.  Iceland reported headline inflation of 3.4% in May, up from 2.3% in March; inflation is forecast to peak just above 3.0% around the middle of this year, meanwhile the Bank's inflation target is 2.5%.


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