19 August 2024
The week ahead
- The Housing and Construction Authority (HMS) publishes the housing price index tomorrow. Eimskip and Iceland Seafood publish results.
- On Wednesday, the CBI announces its interest rate decision. Alongside the rate decision, the CBI publishes its August Monetary Bulletin, containing an updated macroeconomic forecast. HMS publishes the rental price index.
- On Thursday, Nova and Reitir publish financial statements.
- On Friday, Statistics Iceland releases trade in goods and services figures for the second quarter.
Image of the week
The market expects unchanged policy rates this week and for the initial rate cut to come later this year, according to the median of responses to the CBI’s market expectation survey. It appears that the longer the policy rate has remained high, the longer the market expects to wait for rate cuts. Three months ago, the market expected to see initial rate cuts in the third quarter and, in the survey conducted six months ago, the initial cut was expected to take place in the second quarter.
Highlights of the previous week
- Non-domestic payment card turnover in Iceland this year to date is higher than the previous year, according to updated figures from the CBI. Key economic indicators for the travel sector currently indicate growth in tourist numbers between years, as well as in spending. The updated figures also show that domestic card turnover has been considerably higher this year to date than previously estimated, or 4% higher than the same time last year.
- According to a market expectation survey carried out last week, the market generally expects to see initial rate cuts in the fourth quarter. The market now assumes that inflation will be slightly higher in the current and coming quarters.
- Registered unemployment was 3.1% in July, unchanged from June. Unemployment generally falls between months in July and unchanged figures indicate slightly diminished tension in the labour market. Unemployment was 2.8% in July 2023.
- We published both an inflation and policy rate forecast. We expect inflation to remain stable at 6.3% in August and then to decline slowly to 5.4% in November. We anticipate an unchanged policy rate on Wednesday.
- Alvotech, Amaroq, Eik, Kvika, SKEL and Landsvirkjun published financial results.
- Inflation measured 2.9% in the US and 2.2% in the UK. Inflation is down between months in the US; up in the UK. An uptick was expected in 12-month inflation in the UK. Both measurements were slightly lower than expected, contributing to the likelihood of policy rate cuts in both countries in September.
- Arion Bank issued covered bonds and offered switches, Government Debt Management announced the results of a tap and the City of Reykjavík cancelled an intended bond issue.
Statistics and market data
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26 August 2024
Non-domestic payment card turnover in Iceland is higher this year to date than previously thought, according to updated figures published by the Central Bank of Iceland (CBI) last week. This week’s highpoint is the CBI’s interest rate decision on Wednesday.
12 August 2024
Departure by non-domestic travellers from Leifsstöð International Airport in July were very similar to the previous year while departures by domestic tourists are somewhat fewer. August measurements for the consumer price index take place this week and several listed companies publish results.
6 August 2024
Overnight stays by non-Icelandic travellers across all registered accommodation types contracted by 1.4% between years in June. This contraction is lower than that measured in non-domestic tourist numbers and payment card turnover
15 July 2024
The volume of travellers to Iceland decreased by 9% in June this year compared to June 2023. Unemployment was 3.1% in June, slightly higher than the same time last year.
8 July 2024
High interest rates have encouraged savings and detracted from demand in the economy. Household deposits had grown by 20% in May this year from the same month in 2023, according to the Central Bank of Iceland’s (CBI) newly published Hagvísar. Demand deposits have increased most.
1 July 2024
The consumer price index (CPI) rose by 0.48% in June. As a result, inflation measured 5.8%, down from 6.2%. Turnover based on March-April VAT reports contracted by 4.6% in real terms and the wage index rose by 0.2% in May, according to figures released by Statistics Iceland last week.
24 June 2024
The housing price index was up by 1.4% in May and the rental price index by 3.2%, according to figures published last week. While the Bank of England maintained an unchanged policy rate, the Swiss National Bank lowered its rate by 0.25 percentage points. Of most interest domestically this week is without doubt the CPI, to be published by Statistics Iceland on Thursday.
18 June 2024
Last week, we saw the publication of unemployment figures, tourist numbers and domestic payment card turnover in May. The US Federal Reserve kept its policy rate unchanged. Later today, the Housing and Construction Authority (HMS) releases the housing price index.
10 June 2024
The European Central Bank (ECB) lowered its policy rate last week. Stronger labour market figures from the US than generally expected increase the likelihood that the Federal Reserve will postpone initiation of rate cuts.
3 June 2024
Domestic product contracted by 4% in the first quarter of the year and inflation measured 6.2% in May, slightly higher than predicted.