Central Bank of Iceland - Annual Report 2007

Rising Icelandic inflation during 2007 was largely due to a surge in house prices, the country's central bank states in its latest Annual Report.

Note: the report was published on 28 March 2008.

"One reason inflation has been difficult to contain in recent years is that the central bank's policy rate increases have not been reflected sufficiently in the mortgage market, as the Housing Financing Fund's (HFF) mortgage rates lagged behind market rates for an extended period of time. Moreover, in

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