Peningastefnunefndar

Peningastefnunefnd, or the Monetary Policy Committee, is the policy-making body of the Central Bank of Iceland responsible for formulating and implementing Iceland's monetary policy. Its principal task is to set the policy interest rate and provide guidance on the stance of policy to influence inflation and economic activity. The committee operates within Iceland's inflation-targeting framework, aiming to keep consumer price inflation near the central bank's target over the medium term, commonly around 2 percent.

Membership and proceedings: The committee is chaired by the Governor of the Central Bank of Iceland and includes Deputy Governors and external members appointed by the Parliament for fixed terms. Meetings are typically held regularly, often monthly, and decisions are based on assessments of inflation prospects, output, wages, and financial conditions. After meetings, minutes and statements are published to communicate the policy stance.

Functions and outcomes: By adjusting the policy rate and issuing forward guidance, the Peningastefnunefnd influences short- and longer-term interest rates, lending conditions, and financial conditions in Iceland. Its decisions affect the krona’s exchange rate path and macroeconomic expectations, with the goal of price stability and sustainable growth.

Remarks: The term peninginastefnunefndar (genitive form) is used in Icelandic to denote the committee’s decisions or actions. In English-language contexts, the body is referred to as the Monetary Policy Committee.