WOOD Flash – Iceland macro: clearly heading for substantial positive real rates
The Monetary Council has raised the key rate (the 7-day deposit rate) by 125bps, to 8.75%, overshooting our longstanding view that the policy rate would peak at 8.00% in this cycle. The minimum reserve requirement for banks was also raised to 2% from 1%. The tone from the statement and the press briefing was hawkish, suggesting that the key rate is likely heading into double digits at the next meetings; our new guidance is for 10.50%. In the latest market participants survey conducted by Sedlabanki, there was a clear message coming through to the MPC that the stance remained too loose and that, over the long term, real policy rates should be in the range of a positive 1-2%, compared with the current -1%.
WOOD & Company is the leading investment bank in Emerging Europe. Founded in 1991 and head-quartered in Prague, our footprint spans the region and touches investors around the globe.
A pioneer in Emerging Europe, WOOD executed many of the first CEE equity trades and landmark investment banking transactions. Our electronic trading platform was the first in the region, and remains the best. We are continually expanding our relevance and reach in these ever-evolving markets.
Our equity market share reflects our stature: 7% in Warsaw, 20% in Bucharest, 16% in Hungary, 40% in Prague and 5% in Vienna. Our distribution is unparalleled, with the largest salesforce in the region, servicing a uniquely diverse investor base.
We couple local expertise with a truly international perspective. With offices on the ground in the region, and in key financial hubs such as London and Milano, we are never far from our clients and we remain at the forefront of what’s afoot in the CEE emerging and frontier landscape.
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