Iceland’s central bank kept its policy interest rate unchanged at 7.50% on Wednesday but said the inflation outlook remains highly uncertain.
“Although inflation has eased and inflation expectations have fallen in the recent term, inflationary pressures remain. The conditions that would enable an easing of the real interest rate have therefore not yet emerged,” the bank’s monetary policy committee said in a statement.
The bank’s decision marks a pause in a series of rate cuts since October last year, when the central bank began an easing cycle from a high of 9.25%.
The small Nordic island nation’s central bank, which targets inflation of 2.5%, added that headline inflation measured 4% in July, after falling by 0.2 percentage points from the previous month.