Central Bank of Iceland Eases More Sharply

May 20, 2020

The Central Bank of Iceland’s 7-day term rate has been slashed to 1.0% from 1.75%, bringing this year’s total amount of decline to two percentage points. The intent of today’s action according to a released statement is to promote money velocity and to strengthen policy transmission, as officials also withdrew the offer of 30-day term deposits. Central bank officials project an 8% contraction of GDP in 2020, assert that the economic outlook has deteriorated, and note that expected inflation seems firmly anchored. Monetary stimulus is being used to complement fiscal stimulus.

Copyright 2020, Larry Greenberg. All rights reserved. No secondary distribution without express permission.

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