Macroeconomist Dr Asgerdur Petursdottir from the University of Bath’s Department of Economics has been appointed to Iceland’s influential Monetary Policy Committee (MPC).

Asgerdur, who is originally from Iceland and previously worked as an economist within its Central Bank, has also held similar positions internationally, at the Central Bank of Sweden and in Australia. Her expertise spans monetary economics, specifically inflation and digital currencies.

The MPC at the Central Bank of Iceland is responsible for making decisions on how to apply its monetary policy instruments to achieve price stability. As its main instrument the MPC sets the country’s policy interest rates which affect financial market conditions and ultimately everyday prices. In 2023, inflation in Iceland - as for much of the rest of the world – is running above the Central Bank’s 2.5% inflation target, with inflation currently at 10.2%.

Through Asgerdur’s research, she has developed economic models to advance the understanding of efficient implementation of monetary policy. These include analysis into the effects of inflation and the study of central bank digital currency as a monetary policy instrument. Some of her recent research has also looked at asset prices and the housing market.

Commenting on her appointment she said: “Becoming a policymaker is a great responsibility as the decisions made by the Monetary Policy Committee affect everyone in Iceland. I am excited to be able to apply what I have studied to the benefit of the Icelandic economy and its people.

“Inflation in Iceland is currently high and above the Central Bank of Iceland’s inflation target. Therefore, through appropriate monetary policy stance and clear forward guidance and communication, the objective is to re-anchor inflation expectations and ultimately get inflation back down to target.”

Director of Research within the Department of Economics, Dr Michael Stimmelmayr added: “I congratulate Asgerdur on her appointment to the Monetary Policy Committee of the Central Bank of Iceland. This is a well-deserved success reflecting her academic profoundness in monetary theory and her recent research on central bank digital currencies, which is at the forefront of central banks’ research agenda.

“Besides her extremely valuable academic contributions as a leader of the Department`s research group ‘Macroeconomics and Finance’, this nomination is a prime example for knowledge exchange where academic experts from the University of Bath have direct impact and influence real-world policy outcomes.

“Only here at the University of Bath, students will benefit from the great opportunity to not only acquire profound knowledge in monetary economics, but also learn from Asgerdur about actual policymaking and the underlying rationales for monetary policy decisions first-hand.”