The Central Bank of Iceland has sent the Government a public report after inflation in December 2025 rose above the deviation threshold relative to the 2.5% inflation target, triggering a formal reporting requirement. The report is intended to explain the reasons for the deviation, how the Bank plans to respond, and how long it expects it will take to return inflation to target. The reporting obligation stems from the joint declaration on the inflation target issued by the Bank and the Government on 27 March 2001, which requires a report when inflation deviates by more than 1.5 percentage points above or below the target. The Bank published the report alongside a letter to the Prime Minister and related Monetary Policy Committee materials, including the statement of 19 November 2025, minutes from the 17–18 November 2025 meeting, and Monetary Bulletin 2025/4.
Central Bank of Iceland 2026-01-12
Central Bank of Iceland submits Government report after inflation exceeds deviation threshold around the 2.5% target
The Central Bank of Iceland issued a report to the Government after December 2025 inflation exceeded the 2.5% target by more than 1.5 percentage points, as required by their 2001 joint declaration. The report, published with a letter to the Prime Minister and related Monetary Policy Committee documents, outlines the reasons for the deviation and the Bank's response plan.