Iceland's central bank Sedlabanki said Thursday it forecasted annual inflation, which stood at 15.9 percent in October, would rise up to nearly 22.7 percent in the first quarter of 2009, according to reports reaching here from Reykjavik.
The economy is expected to fall 8.3 percent next year. In 2010,gross domestic product is foreseen to fall 1.7 percent versus an initial estimate of 1.9 percent decline, said the Sedlabanki in a statement posted online.
In the current year, the economy is expected to rise only 1.8 percent. It was better than the earlier estimate of 1.1 percent, the Sedlabanki said, adding that the inflation outlook for 2009 asa whole was revised up to 14.1 percent from 7.6 percent.
The Sedlabanki pointed out that economic recovery was expected to begin in 2011.
Earlier Thursday, the Board of Governors of the Sedlabanki decided to hold the policy interest rate unchanged at 18 percent, which was hiked by 6 percentage points on Oct. 28.
Last month, Iceland secured a 2.1 billion U.S. dollar loan from the International Monetary Fund (IMF) after the krona collapsed following the government takeover of the three biggest banks, which were unable to secure short-term funding.
Source: Xinhua
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