28th February | Category: News
Iceland’s annual inflation rate slowed for the first time since November, easing pressure on the Central Bank to raise interest rates. Inflation slowed to 6.3 percent in February from 6.5 percent in January, according to Reykjavik-based Statistics Iceland. In addition, consumer prices rose 1 percent in the previous month.
The Central Bank of Iceland indicated in early February that it was ready to raise interest rates in order to cap inflation. However, the Bank earlier this month left its benchmark rate unchanged at 4.75 percent for a second consecutive meeting, after last year raising borrowing costs for the first time since the country’s banks failed in 2008.
The Central Bank expects inflation to slow to 4.6 percent this year, 3.2 percent by the end of 2013, and 2.6 percent by the end of 2014, it said in a 8 February statement. Sedlabanki, which targets annual price growth of 2.5 percent, raised its forecast for economic growth in 2012 to 2.5 percent from 2.3 percent previously. The bank estimates that inflation will slow to 6 percent in March and taper off steadily for the remainder of the year.
Link to Statistics Iceland: http://www.statice.is/