Central Bank of Iceland Holds Interest Rate at 8.00 Percent

The Central Bank of Iceland unanimously decided to keep its benchmark interest rate on seven-day term deposits at 8.00 percent on Wednesday. This pause follows a series of three rate increases since March that totaled 75 basis points.

Policymakers noted a slowdown in overall economic activity but found that underlying inflation remains too high. Inflation reached 5.9 percent in September, marking a two-year high. The bank attributed this spike primarily to public levy hikes and the conflict in the Middle East.

Although the committee expects inflation to decline rapidly next year, it opted to maintain a tight monetary stance. This decision stems from ongoing uncertainty regarding the global economy and the domestic labor market.