Iceland hikes again amid inflation shock

Central Bank of Iceland
The Central Bank of Iceland

The Central Bank of Iceland was forced to make a substantial revision to its inflation forecast and hiked rates a further 50 basis points today (August 19), as Icelandic firms agreed large wage settlements.

The second 50bp hike in a row brings the central bank's benchmark seven-day rate to 5.5%, and in a statement the monetary policy committee (MPC) was clear that more hikes would likely need to follow.

"If inflation rises in the wake of the wage settlements, as is forecast, the MPC will have to

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