Central Bank of Iceland Implements Third Rate Hike of 2021

October 6, 2021

At the Central Bank of Iceland, the seven-day term deposit rate was increased by 25 basis points to 1.5%. This is the third quarter percentage point tightening since May. Inflation topped 4% at 4.4% last month, and supply chain shortages continue, further risking an upward drift in inflation expectations. While first-half growth underperformed the expectations of central bank officials, they expect that to be made up during the second half of this year. At 1.5%, Iceland’s policy interest rate is only half as high as its pre-pandemic level of 3.0%.

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