The Central Bank of Iceland has sent the Government a public report after inflation in April 2025 rose above the upper deviation threshold around the inflation target, triggering a formal reporting obligation. The report explains the reasons for the deviation, how the Bank intends to react, and the Bank’s assessment of how long it will take for inflation to return to target. The inflation target is set at 2.5% under a joint declaration issued by the Bank and the Government on 27 March 2001, and a report is required if inflation deviates by more than 1.5 percentage points in either direction. The Bank also published a letter to the Prime Minister and related documents, including Monetary Bulletin 2025/2 and the Monetary Policy Committee’s 21 May 2025 statement and minutes from its 19 and 20 May meeting.
Central Bank of Iceland 2025-06-11
Central Bank of Iceland submits report to government after April 2025 inflation exceeds upper deviation threshold
The Central Bank of Iceland reported to the Government after April 2025 inflation exceeded the upper deviation threshold of the 2.5% target, detailing reasons for the deviation, planned responses, and the expected timeline for returning to target. The Bank also released a letter to the Prime Minister and related documents, including the Monetary Bulletin 2025/2 and the Monetary Policy Committee's May 2025 statement and minutes.