Iceland: Staff Report for the 2006 Article IV Consultation

Author: International Monetary Fund

Volume/Issue: Volume 2006 Issue 296

Publication date: August 2006

ISBN: 9781451819328

$20.00

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Topics covered in this book

This title contains information about the following subjects. Click on a subject if you would like to see other titles with the same subjects.

Banks and Banking , Inflation , Money and Monetary Policy , Public Finance , ISCR , CR , bank result , housing market , Reykjavik's housing price index , exchange rate movement , inflation-targeting monetary policy framework , inflation development , IMF staff estimate , Loans , Exchange rates , Inflation , Mortgages , Global

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Grenada

Nepal

Republic of Congo : 2001 Article IV

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.