Central Bank of Iceland

Central Bank of Iceland

November 15, 2017

Iceland’s seven-day term rate had been cut 25 basis points last month and earlier by 50 basis points in August 2016 and 25 bps each in May and June of this year. But a statement released after the latest review believes that the interest rate of 4.25% is appropriate for now. “The current monetary stance […] More

Central Bank of Iceland

May 17, 2017

A stronger anchor for inflation expectations at target and the appreciation of the króna have enabled the Monetary Policy Committee to achieve its legally mandated price stability objective with a lower interest rate than would otherwise have been possible. Officials undertook a third cut of the 7-day repo rate during the past year, but at […] More

Central Bank of Iceland

March 15, 2017

The seven-day Icelandic deposit rate was left at 5.0%. Reductions of 50 basis points last August and 25 bps in December reversed two increases that had been engineered in August and November of 2015. A statement released today by the monetary policy committee called the stance “tight,” which it is juxtaposed against a 1.9% on-year […] More

Inflection Point in Icelandic Monetary Policy

February 8, 2017

The Monetary Policy Committee retained a 5.0% seven-day repo rate but released a statement that projects rising demand-side pressures, a possibly tighter labor market, and seemingly redirects the bias of policy from ease toward restraint. Economic growth was around 6% last year compared to the Bank’s assumption made last November of 5%. The last two […] More

Central Bank of Iceland Eases Somewhat Unexpectedly

December 14, 2016

The seven-day deposit rate was cut to 5.0% from 5.25%. Although the rate had be reduced by 50 basis points in August, today’s action was somewhat surprising as growth has been strong. In a released statement, officials note that the strength of the krona influenced this second rate reduction of 2016. Inflation measured 2.1% in […] More

Central Bank of Iceland

November 16, 2016

Officials at Sedlabanki had cut the 7-day repo rate by 50 basis points in August. This was a trend reversal following three increases totaling 125 bps between June and November of 2015. Many analysts were expecting a second rate reduction this month and inflation has been under target for almost three years in Iceland and […] More

Central Bank of Iceland Keeps Main Interest Rate at 5.25%

October 5, 2016

The seven-day term deposit rate had been cut in August by 50 basis points to 5.25%, partly reversing 125 basis points of tightening between June and November of 2015. One development against cutting the rate again is the rise of consumer prices last month, but a statement released after the latest policy meeting attributes the […] More

Central Bank of Iceland

August 24, 2016

Icelandic monetary authorities implemented their first interest rate change, a reduction of 50 basis points, since a hike last November and their first rate cut since December 2014. Moreover, forward guidance on future rate changes switched from a bias toward increases to an ambivalent signal. After the Monetary Policy Committee’s prior meeting in early June, […] More

Central Bank of Iceland

May 11, 2016

Inside of less than a six-month span, the seven-day collateralized Icelandic lending rate was raised three times by 50 basis points each between June 2015 and last November to the current 6.5% level.  Such is four times greater than April’s on-year pace of CPI inflation.  Those tightenings of policy represented a normalization process and pre-emptive […] More

Central Bank of Iceland

March 16, 2016

The Monetary Policy Committee has retained a 6.5% 7-day collateralized lending interest rate.  Prior hikes were made of  50 basis points last June and August as well as 25 bps in November, which was the most recent change.  A statement released today by the committee commits policy to further tightening because of accelerating domestic inflationary […] More

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