The Central Bank of Iceland left its key rate on the seven-day term deposits unchanged at a record low of 3 percent on December 11th 2019. It follows a 25bps cut in the previous meeting. The central bank said the current policy stance remains appropriate as growth figures for the first nine months of the year are in line with the Bank’s projections and the inflation outlook is broadly unchanged. Policymakers added that near-term monetary policy decisions will depend on the interaction between developments in economic activity, on the one hand, and inflation and inflation expectations, on the other.

Interest Rate in Iceland averaged 7.39 percent from 1998 until 2019, reaching an all time high of 18 percent in October of 2008 and a record low of 3 percent in November of 2019. This page provides - Iceland Interest Rate - actual values, historical data, forecast, chart, statistics, economic calendar and news.

Interest Rate in Iceland is expected to be 3.00 percent by the end of this quarter, according to Trading Economics global macro models and analysts expectations. Looking forward, we estimate Interest Rate in Iceland to stand at 3.00 in 12 months time. In the long-term, the Iceland Interest Rate is projected to trend around 3.00 percent in 2020, according to our econometric models.

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Iceland Interest Rate

Actual Previous Highest Lowest Dates Unit Frequency
3.00 3.00 18.00 3.00 1998 - 2019 percent Daily

Calendar GMT Actual Previous Consensus TEForecast
2019-08-28 08:55 AM CBI Interest Rate Decision 3.5% 3.75% 3.75%
2019-10-02 08:55 AM CBI Interest Rate Decision 3.25% 3.5% 3.5%
2019-11-06 08:55 AM CBI Interest Rate Decision 3% 3.25% 3.25%
2019-12-11 08:55 AM CBI Interest Rate Decision 3% 3% 3%
2020-02-05 08:55 AM CBI Interest Rate Decision 3% 3%


News Stream
2019-11-06
Iceland Cuts Key Interest Rate to 3.0%
The Central Bank of Iceland slashed its rate on seven-day term deposits by 25bps to a record low of 3 percent during its November meeting. It follows a similar cut in October and was the fifth time this year that interest rates were lowered. Policymakers said the outlook for economic growth in the second half of the year deteriorated while GDP growth in the first six months of 2019 was higher-than-expected. The central bank forecasts GDP to contract by 0.2 percent in 2019 and to expand by 1.6% in 2020. In October, inflation eased to 2.8 percent, its lowest since October 2019 and it is projected to reach the 2.5 percent target at the end of the year.

2019-10-02
Iceland Cuts Key Interest Rate to 3.25%
The Central Bank of Iceland lowered its rate on seven-day term deposits by 25 bps to a record low during its October meeting, saying economic growth continued to slow in the first half of this year. In September, annual inflation rate declined to 3.0 percent from 3.2 percent in August while inflation expectations have fallen since the last meeting of the Committee. The Board also noted, that recent developments suggest that economic activity has been more robust than expected.

2019-08-28
Iceland Cuts Key Interest Rate to 3.5%
The Central Bank of Iceland lowered its rate on seven-day term deposits by 25bps to 3.5 percent during its August meeting, saying the GDP growth outlook for 2020 has deteriorated on the back of the strong contraction in tourism while inflation expectations have fallen back to target. Still, policymakers noted that this year’s economic contraction will measure 0.2 percent, slightly less than was forecast in May, due mainly to more resilient private consumption growth, although the contribution of net foreign trade is also more positive, as demand has shifted towards domestic production. Near-term monetary policy decisions will depend on the interaction between developments in economic activity, on the one hand, and inflation and inflation expectations, on the other.

2019-06-26
Iceland Cuts Interest Rate to 3.75%
The Central Bank of Iceland lowered its seven-day term deposit rate by 25bps to an all-time low of 3.75% on June 26th 2019, following a 50bps cut in the previous month, saying inflation expectations have fallen. In June, inflation rate dropped to 3.3 percent from a five-month high of 3.6 percent in May, and in line with the Central Bank’s forecast. Policymakers kept the economic outlook from the previous MPC meeting, at which GDP was projected to shrink by 0.4 percent in 2019 and inflation to return to the target of 2 percent by mid-2020 but the contraction in tourism is expected to be deeper than previously expected.

2019-05-22
Iceland Cuts Interest Rate to 4%
The Central Bank of Iceland lowered its seven-day term deposit rate by 50bps to an all-time low of 4% on May 22nd 2019, saying output is now forecast to contract by 0.4% this year instead of rising by 1.8%, as was expected in February amid a contraction in tourism and reduced marine product exports. Also, policymakers forecast that inflation will peak at 3.4% in mid-2019 and then ease back to the target by mid-2020.

2019-03-20
Iceland Holds Interest Rate Steady at 4.5%
The Central Bank of Iceland kept its seven-day term deposit rate at 4.5% at its March 20th 2019 meeting, as widely expected. Although the inflation eased to 3% in February and the krona appreciated since the last monetary meeting, inflation is expected to rise somewhat over most of the year, depending on the results of the ongoing wage negotiations. Policymakers noted that GDP growth slowed between the 1st half and 2nd half of 2018, and was 4.6% in 2018, above bank projections of 4.3%. Still, recent indicators of economic activity and the labour market suggest that demand pressures in the economy continue to subside. Policymakers added that long-term inflation expectations are still above target and reiterated they could call for a tighter monetary stance in coming months.


Iceland Interest Rate
In Iceland, the benchmark interest rate is set by the board of Governors of the Central Bank of Iceland (Seðlabanki Íslands). The main interest rate is the seven-day term deposit rate since May 2014. Previously the Bank’s key rate was the rate on its collateralised loans to financial institutions, but in the wake of the crisis the interest rate on the Bank’s deposits had greater influence on money market, as demand for Central Bank loans had been limited. Therefore the Bank’s key interest rate is the rate on seven-day term deposits.

Iceland Money Last Previous Highest Lowest Unit
Interest Rate 3.00 3.00 18.00 3.00 percent [+]
Interbank Rate 3.41 3.41 18.47 3.41 percent [+]
Money Supply M0 111.98 113.22 173.88 11.05 ISK Billion [+]
Money Supply M1 520.42 522.08 533.18 8.88 ISK Billion [+]
Money Supply M2 1188.12 1206.24 1227.58 0.06 ISK Billion [+]
Money Supply M3 1960.87 1973.05 1973.05 0.03 ISK Billion [+]
Foreign Exchange Reserves 821885.43 813112.15 1110368.00 610.00 ISK Million [+]
Banks Balance Sheet 3842642.00 3872505.00 14896283.00 257400.00 ISK Million [+]
Private Debt to GDP 314.90 336.70 400.80 272.80 percent [+]
Central Bank Balance Sheet 829840.00 855157.00 1638738.00 57829.00 ISK Million [+]