The business cycle

Iceland: Hawkish bias from Sedlabanki

By August 31, 2018 September 3rd, 2018 No Comments

The Monetary Policy Council decided to keep the seven-day term deposit rate unchanged at 4.25%, as widely expected. According to Bank’s macroeconomic forecast, GDP growth will measure 3.6% this year, as it did in 2017, but stronger than Bank’s forecast in May. This stems from more favourable contribution from net trade which outweighs weaker growth in domestic demand. As stated in previously, GDP growth is still expected to ease this year, due to weaker export growth, less rapid increase in domestic demand, house prices and labour market.