Bank of Iceland Creates Some Surprise, Leaving Interest Rates Unchanged

December 9, 2015

Sedlabanki’s 7-day collateralized lending rate had earlier been increased this year by 50 basis points each in June and August as well as 25 bps last month to 6.5%.  Underlying inflation is expected to rise, but policymakers lately believe that inflation in the near term will be lower than imagined before because of a firmer krona and still-falling commodity prices.  Projected 2016 inflation has been reduced, and and officials decided to cut reserve requirements, which were doubled to 4% three months ago, are going back to 2.5% later this month.

Copyright 2015, Larry Greenberg.  All rights reserved.  No secondary distribution without express permission. 



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