Icelandic monetary policy

Central Bank of Iceland Shifts Gears

June 10, 2015

First some policy history.  Iceland’s seven-day collateral lending rate was slashed in 15 steps to 4.25% by February 2011 from 18.00% prior to March 2009.  Then, seven increased between August 2011 and end-2012 lifted the rate back to 6.0%.  The next directional reversal came late last year, cuts of 25 basis points in November followed […] More

Central Bank of Iceland Elects Not to Cut Interest Rate at February Meeting

February 4, 2015

The seven-day Icelandic rate had been cut by 50 bps in December and 25 bps in November 2014, reversing 43% of a previous 175-basis point rise in six steps between August 2011 and November 2012.  A statement released by the Monetary Policy Committee explains why a further deceleration of inflation to 0.8% in December-January did […] More

Bank of Iceland

August 21, 2014

The Bank of Iceland made a scheduled interest rate announcement on Wednesday.  Iceland’s seven-day central bank interest rate was kept at 6.0%, its level since November 2012.  A released statement observes, “The inflation outlook has improved somewhat since May, and it now appears that inflation will remain close to target during the forecast horizon. A […] More

Central Bank of Iceland

October 2, 2013

Iceland’s Monetary Policy Committee left its 7-day collateralized interest rate at 6.0%, a third as much as the pre-March 2009 high and the prevailing level since a 25-basis point increase in November 2012, which had been the sixth advance since August 2011 from a base of 4.25%.  Icelandic GDP growth was roughly 2% in the […] More

Bank of Iceland Keeps 7-Day Lending Rate at 6.0%

August 21, 2013

A released statement from Iceland’s Monetary Policy Committee following today’s fifth policy meeting of 2013 made no changes to the final paragraph including the sentence on forward interest rate guidance. The degree to which such normalization takes place through changes in nominal Central Bank rates will depend on future inflation developments, which in turn will […] More

No Change Made in Central Bank of Iceland Interest Rate

March 20, 2013

Six increases of the seven-day collateralized lending rate between August 2011 and November 2012 lifted such from 4.25% to 6.0%, but three subsequent meetings have come and gone without a further increase.  A statement released today after the third of those meetings Notes that Icelandic GDP growth slowed more sharply between 2011 and 2012 than […] More

Central Bank of Iceland: Benchmark Interest Rate Kept at 6.0%

February 6, 2013

The 7-day Icelandic collateralized interest rate was previously raised from a base of 4.25% by 25 basis points in August and November of 2011, then by 25 bps in March 2012, by 50 bps in May, 25 bps in June and, most recently, by 25 bps last November to 6.0%.  While keeping that level after […] More

Icelandic Monetary Policy Pause Nearly Over

October 3, 2012

The 5.75% seven-day collateralized lending rate was left unchanged after the Monetary Policy Committee met at the Central Bank of Iceland (Sedlabanki), but a released statement warned, “in the absence of changes in the outlook for inflation and the economic recovery, it is likely that further interest rate increases will be needed in the near […] More

Icelandic Monetary Tightening Paused

August 22, 2012

Sedlabanki, the Central Bank of Iceland, left its key seven-day collateralized lending rate at 5.75%, which constitutes a pause in a trend of five increases since August 2011 and most recently on June 13, 2012.  Four of those hikes were by 25 basis points and the other in May of this year was by 50 […] More