Report to the Government on inflation in excess of tolerance limits
The joint declaration issued by the Government and the Central Bank of Iceland on 27 March 2001 stipulated that, if inflation deviated by more than 1½% from the inflation target (currently 2½%), the Bank must submit a report to the Government stating the reasons for the deviation, the Bank’s planned response to it, and the length of time needed, in the Bank’s assessment, to bring inflation back to target. This report shall be made public.
According to measurements published by Statistics Iceland on 28 August 2013, twelve-month inflation in terms of the consumer price index (CPI) measured 4.3% in August. This is more than 1½ percentage points above the inflation target. In accordance with the provisions of the March 2001 joint declaration, the Governor of the Central Bank sent the Bank’s report to the Minister of Finance and Economic Affairs on 12 September 2013.