Central Bank of Iceland
mbl.is/Golli
The Monetary Policy Committee of the Central Bank of Iceland has decided to keep the bank’s interest rates unchanged.
The key interest rate — the rate on seven-day term deposits — will therefore remain at 7.50%, with all committee members supporting the decision.
This marks the second consecutive meeting in which the committee has opted to maintain the current rate level.
“Inflation measured 4.1% in September, rising by 0.3 percentage points from the previous month. The increase was expected and largely reflects unfavorable base effects,” the bank said in a statement.
It added that there has been a clear turnaround in economic activity recently, with overall demand pressures easing in line with the bank’s tight monetary stance.
“Nevertheless, the economy remains resilient, wage increases have been significant, and although inflation expectations have declined in recent quarters, they are still above target,” the statement continued.
“Much has moved in the right direction, but conditions are not yet in place to ease the current real interest rate restraint. Further rate cuts will depend on inflation moving closer to the bank’s 2.5% target.
Monetary policy in the coming months will, as before, be guided by the evolution of economic activity, inflation, and inflation expectations.”