50-Basis Point Icelandic Central Bank Rate Hike
February 8, 2023
The Central Bank of Iceland‘s one-week term rate was raised today by 50 basis points to 6.5%. That incremental size is twice those of the previous two rate increases in October and November. The policy rate was cut five times in 2020, taking such from 3.0% to just 0.75%. Four hikes in 2021 between May and November totaled 125 basis points, and six more increases last year lifted the rate by four percentage points to 6.0%. According to a released statement, additional increases are considered likely over coming months because officials now believe it will take longer to restore in-target inflation than they presumed previously. Measured expected inflation has moved higher. The Icelandic currency, like many others, has lost value against the dollar. Fiscal policy is becoming more stimulative, and economic growth is coming off a very strong year. CPI inflation of 9.9% in January was its highest in 136 months.
Copyright 2023, Larry Greenberg. All rights reserved. No secondary distribution without express permission.
Tags: Central Bank of Iceland
ShareThis
