Iceland: Staff Report for the 2006 Article IV Consultation

August 8, 2006

Preview Citation

Format: Chicago

Iceland: Staff Report for the 2006 Article IV Consultation, (USA: International Monetary Fund, 2006) accessed December 23, 2024

Summary

Over the last three years, a rapid expansion in domestic demand has dramatically widened the current account deficit in Iceland. Demand expanded faster than supply, and evidence of overheating is widespread. Monetary policy has tightened, but, until recently, the impact has been channeled primarily through the exchange rate. Despite hikes in the policy rate, increased competition in the mortgage market eased household credit conditions, and household indebtedness has surged. The financial market turbulence early in the year ended the favorable conditions that had allowed banks to fund rapid balance sheet growth.

Subject: Banking, Exchange rates, Financial institutions, Fiscal policy, Foreign exchange, Inflation, Loans, Mortgages, Prices

Keywords: Bank result, CR, Exchange rate movement, Exchange rates, Global, Housing market, IMF staff estimate, Inflation, Inflation development, Inflation-targeting monetary policy framework, ISCR, Loans, Mortgages, Reykjavik's housing price index

Publication Details

Pages:

43
Volume:

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DOI:

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Issue:

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Series:

Country Report No. 2006/296
Stock No:

1ISLEA2006001
ISBN:

9781451819328
ISSN:

1934-7685

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