Iceland Lifts Key Rate to 15%

[GRG55]

Now here's a Central Bank working really hard to stem a currency meltdown. Now Iceland isn't Australia or New Zealand, but there are some parallels...

Iceland Lifts Key Rate to 15% at Unscheduled Meeting

By Tasneem Brogger
March 25 (Bloomberg) -- Iceland's central bank (http://www.sedlabanki.is/) unexpectedly raised its benchmark interest rate to 15 percent at an unscheduled meeting after a slump in the krona threatened to fuel inflation that is already running at more than twice the bank's target.

The repo rate was raised from 13.75 percent, the Reykjavik- based central bank said on its Web site today. The bank hadn't planned to hold a rate meeting until April 10.

The krona had shed as much as a quarter of its value against the euro this year on concern that the global financial turmoil would make it harder for Iceland to finance one of the world's largest current account deficits. The shortfall stood at 15.6 percent of the economy last year, according to combined statistics office and central bank data...
http://www.bloomberg.com/apps/news?pid=20601068&sid=aUg1HvugYbfw&refer=economy

[metalman]

slump in the krona threatened to fuel inflation that is already running at more than twice the bank's target.

what's this? a public admission that currency depreciation leads to inflation? that's not what the flying monkeys of the fire economy say.... DOLLAR DEPRECIATION WILL NOT CONTRIBUTE TO U.S. INFLATION
(http://www.somc.rochester.edu/May04/Stockman.pdf)

[GRG55]

what's this? a public admission that currency depreciation leads to inflation? that's not what the flying monkeys of the fire economy say.... DOLLAR DEPRECIATION WILL NOT CONTRIBUTE TO U.S. INFLATION
(http://www.somc.rochester.edu/May04/Stockman.pdf)

I figure it's worth watching their manipulations and machinations, to see if it gives some insights into where the daisy chain (Ireland, USA, UK, Australia, New Zealand...) may be heading.

Iceland seems like such a nice laboratory experiment.

Of course if there is a meltdown in Iceland, the UN IPCC is sure to blame it on global warming...