Central Bank of Iceland prepares for ‘substantial’ interest rate increases
Pay bargaining creating uncertainty
The Central Bank of Iceland will soon have to hike interest rates sharply to tackle the effects of pay demands that are expected to outstrip productivity growth by a large margin, the minutes of the latest monetary policy meeting show.
Published today (May 28), the minutes show monetary policy committee (MPC) members grappling with considerable uncertainty around the outcome of pay bargains. They considered various scenarios and suggested models based on historical trends may underestimate the
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