19 September 2005

Report to the Government on inflation beyond the tolerance limit

The declaration by the Government of Iceland and Central Bank on March 27, 2001 stipulates that if inflation moves by more than 1½% beyond the inflation target, which is currently 2½%, the Bank is obliged to submit a report to the Government explaining the reasons for the deviation, how the Bank intends to react and how long it will take to reach the inflation target again in the Bank’s assessment. The report shall be made public.

The consumer price index published on Monday, September 12 showed an increase of 4.8% from September last year. In accordance with the March 2001 declaration by the Government of Iceland and Central Bank, the Board of Governors today presented the acting Prime Minister with the Bank’s report (attached). The report states that the Bank will publish its next quarterly Monetary Bulletin on September 29. This will include new inflation and macroeconomic forecasts and a detailed analysis of inflation developments in recent months.

For further information, contact Birgir Ísleifur Gunnarsson, Chairman of the Board of Governors of the Central Bank of Iceland, tel. +354 569-9600.

Report to the Government September 2005 (pdf-37kb)

No. 28/2005
September 19, 2005