Another Icelandic Central Bank Rate Cut

November 6, 2019

The Central Bank of Iceland’s 7-day term rate was chopped 25 basis points to 3.0%. Along with earlier reductions of 25 bps in October, August and June and a 50-basis point cut in May, that brings this year’s total decline to 150 basis points. A released statement suggests that the rate may now be appropriately positioned but doesn’t close the door on possible further reduction: “The economic outlook could be overly optimistic, however, particularly in view of global economic uncertainty.” The second half 2019 economic outlook has deteriorated, and CPI inflation is apt to slow at a faster pace than imagined earlier.

Copyright 2019, Larry Greenberg. All rights reserved. No secondary distribution without express permission.

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