Who is the narrator, can she or he read minds, and, more importantly, can we trust her or him?
Third Person (Limited Omniscient)
Although Graceling is written in the third person, it is a form of the third person—limited omniscient—that gives us great access to Katsa's thoughts. Basically, we see events from her point of view, which means we know how she feels about what's going on. That's how we know, for instance, that Katsa feels so threatened by the young girl in Estill who can read minds. "This girl she would hurt; this girl she would torture if it would stop her from taking Katsa's thoughts" (4.70). That's the omniscient part of this POV.
The limited part comes in when we consider what we know about what's going on. We can only know about events that Katsa knows about—either things she's witnessed firsthand or things she's heard about from other characters. We never know, for instance, what Oll is thinking unless he tells Katsa. And we could never witness what Po's doing at his cabin while Katsa and Bitterblue are traveling with Captain Faun because Katsa isn't with him. So while this POV gives us great insight into Katsa's character, our understanding of other characters is limited to what we can figure out from Katsa's interactions with them.