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Inflation slapping Iceland around

AlfredSokol said: "Iceland has raised their interest rates to 15% in an effort to save the beleaguered "krona". The country has a 6.8% annual interest rate and is [url=http://www.iht.com/articles/2008/03/25/business/icebank.php]trying to fight back[/url] [quote] The krona has tumbled 17 percent against the euro in the past three weeks 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 country risks "spiraling" wages and inflation if that decline is not pared, the central bank said. Inflation reached an annual rate of 6.8 percent last month. "They were losing the battle with inflation," said Ludvik Eliasson, an economist at the country's second-largest lender, Landsbanki Islands. "Inflation expectations were rising significantly over the past few weeks on the decline of the krona. They had to do something convincing." The krona gained as much as 5.3 percent against the euro after the surprise announcement and jumped as much as 6.3 percent against the dollar.[/quote] Sounds like quite a mess."