8 April 2024
The week ahead
- On Monday, the CBI publishes real exchange rate figures.
- On Wednesday, the Icelandic Tourist Board releases departure figures for Keflavík Airport International and the Directorate of Labour publishes registered unemployment.
- Price measurements for the April Consumer Price Index will be carried out this week.
Image of the week
Around 14% more tourists travelled through Keflavík International Airport in February of this year than the same month of 2023. The duration of stays is shorter than before, with registered overnight stays declining by 2.7% between years in February according to recent figures from Statistics Iceland. In the past three months, payment card turnover and overnight stays have declined from the previous year at the same time that traveller numbers are up. Since December 2023, visitors to Iceland have stayed for a shorter period and appear to spend less than before. It is hard to say whether this change is the result of seismic and volcanic activity on the Reykjanes peninsula. Some hospitality and tourist companies have had to curtail their activities because of proximity to the lava field and this may account for the change in part. It has also been pointed out that companies in the travel and hospitality sector have increasingly taken their merchant acquiring business to non-domestic service providers. Such payment card turnover is hard to discern in public statistics and could as a result be underestimated. This would not account for the decrease in registered overnight stays though, which could indicate a change in consumer behaviour.
Highlights of the previous week
- On Wednesday, the Central Bank of Iceland (CBI) released the minutes of the Monetary Policy Committee’s meeting. All Committee members save one were in agreement on maintaining unchanged interest rates. Demand is still strong as reflected in the housing market. There is tension in the labour market and companies appear ready to enter a hiring cycle again while unemployment remains low. There is also still uncertainty about the financing of public expenditure and the resulting impact on demand. The Committee is waiting for clear indications that inflation is “obviously receding” and considers it important that rate cuts begin at “a credible point in time”.
- On Thursday, the CBI published the statement of the MPC on changes to the minimum reserve requirements of credit institutions. The MPC met at an additional meeting on 2 April and decided to raise the fixed minimum reserve requirement of credit institutions from 2% to 3% of the reserve base.
- The City of Reykjavík auctioned bonds.
Statistics and market data
Disclaimer
This review and/or summary is marketing material intended for information purposes and does not constitute financial advice or an independent financial analysis. The legal provisions that apply to financial advice and financial analysis do not apply to this content, including the ban on transactions prior to publication. The review is based on publicly available information from parties that Landsbankinn deems reliable yet the Bank cannot independently guarantee the accuracy of the information. Landsbankinn is not liable for any loss that may result from use of the information contained herein.Information about the past performance of financial instruments or indices show nominal returns, unless otherwise mentioned. If results are based on foreign currencies, returns may increase or decrease as a result of currency fluctuations. Past returns are not necessarily an indication of future returns. Detailed information about the historic performance of financial instruments and indices is available on Landsbankinn’s website, including on returns for the past 5 years.
Securities transactions involve risk and readers are encouraged to familiarise themselves with the Risk Description for Trading in Financial Instruments and Landsbankinn’s Conflict of Interest Policy on Landsbankinn’s website.
Landsbankinn is licensed to operate as a commercial bank in accordance with Act No. 161/2002, on Financial Undertakings, and is subject to supervision by the Financial Supervisory Authority of the Central Bank of Iceland (www.fme.is).
You may also be interested in
6 Nov. 2024
Monthly newsletter where Economic Research analysis new statistics, reviews current economic affairs and provides an outlook.
21 Oct. 2024
Last week, we published an economic forecast to the year 2027. The housing price and rental price indexes decreased more between months in September and household payment card turnover contracted between years domestically while rising abroad. The Central Bank of Iceland (CBI) published the minutes of the Monetary Policy Committee (MPC) meeting, which shows that all Committee members agreed to lower the policy rate. Several companies publish financial results this week.
15 Oct. 2024
Landsbankinn Economic Research forecasts a status quo in the economy between years and a 0.1% contraction in GDP. Setbacks affected the export sector in the first half of the year, with capelin catch failure and slower growth in the travel sector causing a contraction. This has been compounded by the cooling impact of high interest rates on demand, which nevertheless remains strong.
14 Oct. 2024
Tomorrow morning, Landsbankinn Economic Research presents a new economic forecast to the year 2027 at a morning meeting in Harpa. This week, the Housing and Construction Authority (HMS) publishes the housing price index, the rental price index and its monthly housing market report. On Wednesday, the Central Bank of Iceland (CBI) releases the minutes of the Monetary Policy Committee’s last meeting. Last week’s highlight was that traveller numbers to Iceland are slightly up between years in September and there is a small uptick in unemployment.
7 Oct. 2024
The Monetary Policy Committee (MPC) of the Central Bank of Iceland (CBI) lowered the policy rate last week, for the first time in four years. The CBI’s key interest rate is now 9% after having stood unchanged at 9.25% for over a year. Inflation in the eurozone remains on a downward trajectory, measuring 1.8% in September, below the 2% inflation target. Inflation figures for the US will be published this week.
30 Sept. 2024
Inflation was slightly lower than expected in September, down from 6.0% to 5.4%. We nevertheless expect that the Monetary Policy Committee (MPC) will wish to proceed with caution when it meets early this week and that it will keep the policy rate unchanged on Wednesday.
23 Sept. 2024
This week, the Central Bank of Iceland (CBI) releases a statement from the Financial Stability Committee and a report on financial stability. Statistics Iceland publishes inflation figures for September on Friday. Last week, the Housing and Construction Authority (HMS) published the housing price index, which rose sharply between months, and the rental price index, which was down between months. Data on payment card turnover, published by the CBI last week, indicates that there is still considerable domestic demand for goods and services.
16 Sept. 2024
This week will see the publication of the housing price index, the rental price index and payment card turnover figures for August. Last week we learned that tourist arrivals in August of this year were similar to the same month in 2023. Unemployment increased slightly between months in August. The fiscal budget for 2025 was presented.
9 Sept. 2024
This week’s highlights are the publication of August tourist figures and registered unemployment, both set for release tomorrow. Last week, the minutes of the last rate decision meeting of the Monetary Policy Committee (MPC) were published. The MPC was unanimous in its decision to keep the policy rate unchanged, unlike the previous three meetings, at which one Committee member voted to lower rates by 0.25 percentage points.
2 Sept. 2024
Inflation decreased unexpectedly between months in August. The economy contracted slightly between months in the second quarter. At the same time, it has become clear that GDP growth was higher in 2023 than previously thought, and that the contraction was less pronounced in the first quarter. This week, the Central Bank of Iceland (CBI) publishes the balance of payment and the minutes of the last meeting of the Monetary Policy Committee (MPC).