Thought in February that inflation was going to 2%

The outlook has changed dramatically

“In the UK, the inflation outlook has changed significantly. Before hostilities broke out in February, inflation was expected to fall to around the 2% target from April onwards. Monetary policy’s task would have been to keep it there. With underlying deflation, more slack in the real economy and a weaker labor market, further easing of monetary policy was likely. Instead, the inflation figure for April was 2.8% – with 0.8 percentage points of the rise attributable “Inflation is likely to rise further this year as electricity and heating bills rise and companies pass on additional costs down the value chain,” Bailey said in his speech.

The International Monetary Fund’s report on financial stability, which was discussed at the conference, touches on the status of marginal economies, which some would like to classify Iceland under. It says that peripheral economies, which have issued significant debt since the beginning of 2025, could face increased challenges regarding debt sustainability. “Overall, the increased role of non-bank foreign investors in emerging markets, while bringing important benefits, has increased sensitivity to changes in global risk attitudes,” the report said.