Rate Hike at the Central Bank of Iceland
August 19, 2026
Officials at the Central Bank of Iceland lifted their 7-day deposit rate by 25 basis points to 8.0%. This marks the third such tightening since March. Today’s 4-1 vote in favor of a higher interest rate comes amid elevated inflation caused by the world energy price shock. Icelandic CPI inflation was at 5.3% in July and has been above 5.1% since January. Inflation faces near-term upside risk, but the baseline forecast anticipates a relatively quick drop in 2027. A statement nonetheless cautions,
Inflation expectations are still too high, as is underlying inflation. Although inflation is expected to decline rapidly in 2027, significant uncertainty remains, especially as regards developments in the global economy and the domestic labor market.
Copyright 2026, Larry Greenberg. All rights reserved.
Tags: Central Bank of Iceland
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