The Central Bank of Iceland raised its key interest rate by 25bps to 1.25% during its August 2021 meeting, to counteract high and persistent inflationary pressures. Policymakers said the economic outlook has improved further since the Bank’s May forecast, with updated GDP growth projections pointing to an expansion of 4% this year, some 0.9 percentage points above the May forecast. The improvement is driven mainly by tourist arrivals, which have increased more rapidly this summer than was previously expected. Unemployment has subsided more than previously forecast, although it remains high, and the slack in the economy has narrowed more quickly. The Committee also noted that headline inflation remained relatively high at 4.3% in July, although it has begun to ease, and it is expected to soften somewhat more slowly than projected earlier. Thus, inflation is seen above 4% through the year-end, before aligning with the central bank's 2.5% target in the Q3 of 2022. source: Central Bank of Iceland

Interest Rate in Iceland averaged 6.80 percent from 1998 until 2021, reaching an all time high of 18 percent in October of 2008 and a record low of 0.75 percent in November of 2020. This page provides - Iceland Interest Rate - actual values, historical data, forecast, chart, statistics, economic calendar and news. Iceland Interest Rate - data, historical chart, forecasts and calendar of releases - was last updated on September of 2021.

Interest Rate in Iceland is expected to be 1.25 percent by the end of this quarter, according to Trading Economics global macro models and analysts expectations. In the long-term, the Iceland Interest Rate is projected to trend around 2.00 percent in 2022 and 2.50 percent in 2023, according to our econometric models.

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Iceland Interest Rate

Actual Previous Highest Lowest Dates Unit Frequency
1.25 1.00 18.00 0.75 1998 - 2021 percent Daily


Calendar GMT Actual Previous Consensus TEForecast
2021-02-03 08:30 AM CBI Interest Rate Decision 0.75% 0.75% 0.75%
2021-03-24 08:40 AM CBI Interest Rate Decision 0.75% 0.75% 0.75%
2021-05-19 08:55 AM CBI Interest Rate Decision 1% 0.75% 0.75%
2021-08-25 08:30 AM CBI Interest Rate Decision 1.25% 1% 1%
2021-09-29 09:00 AM Financial Stability Report
2021-10-06 08:55 AM CBI Interest Rate Decision 1.25% 1.25%
2021-11-17 08:55 AM CBI Interest Rate Decision 1.25%
2021-11-17 09:00 AM Monetary Bulletin
Go to our Calendar for more events. Or learn more about the Calendar API for direct access.


News Stream
Iceland Hikes Key Interest Rate to 1.25%
The Central Bank of Iceland raised its key interest rate by 25bps to 1.25% during its August 2021 meeting, to counteract high and persistent inflationary pressures. Policymakers said the economic outlook has improved further since the Bank’s May forecast, with updated GDP growth projections pointing to an expansion of 4% this year, some 0.9 percentage points above the May forecast. The improvement is driven mainly by tourist arrivals, which have increased more rapidly this summer than was previously expected. Unemployment has subsided more than previously forecast, although it remains high, and the slack in the economy has narrowed more quickly. The Committee also noted that headline inflation remained relatively high at 4.3% in July, although it has begun to ease, and it is expected to soften somewhat more slowly than projected earlier. Thus, inflation is seen above 4% through the year-end, before aligning with the central bank's 2.5% target in the Q3 of 2022.
2021-08-25
Iceland Lifts Interest Rate to 1%
The Central Bank of Iceland raised its key interest rate by 25bps to 1 percent during its May meeting, amid high and persistent inflationary pressures. Latest economic data suggests a stronger than expected recovery, driven by a more robust domestic demand, with updated GDP growth forecasts standing at over 3% for 2021 and 5% for 2022. Signs of warning came specially from the widespread inflationary pressures, as prices are rising at a faster and more persistent way than previously expected, currently at an 8-year high of 4.6% YoY. Global factors such as supply-side disruptions and steep rises in the prices of oil and commodities, and country-specific ones like the increasing wages and house prices, and the depreciation of the króna, are the main causes for the upward trend in prices.
2021-05-19
Iceland Holds Interest Rate Steady at 0.75%
The Central Bank of Iceland kept its seven-day term deposit rate at a record low of 0.75% during its March 2021 meeting. Policymakers said that the economic contraction in 2020 (-6.6%) was smaller than the Bank forecast in February (-7.7%), as economic activity in Q4 turned out stronger than projected, and the contraction in the first three quarters of the year was somewhat smaller than previous figures had indicated. Meantime, recent surveys and high-frequency indicators suggest a continuing recovery in 2021, although the outlook is still highly dependent on the evolution of the pandemic and the pace of vaccination. The Committee also noted that inflation slowed to 4.1% in February and it is expected to start to ease this spring, although the near-term outlook has probably deteriorated since February, in particular as global oil and commodity prices have risen recently. Furthermore, inflation expectations have risen slightly.
2021-03-24
Iceland Holds Interest Rate Steady at 0.75%
The Central Bank of Iceland kept its seven-day term deposit rate at a record low of 0.75% during its February 2021 meeting. Policymakers said that the economic contraction in 2020 is now projected to be smaller than the Bank forecast in November, as domestic demand appears to have been stronger than it was previously assumed. For 2021, the outlook is also for domestic demand to grow more than previously projected, whereas the outlook for exports has deteriorated. The Committee also noted that inflation rose in January, measuring 4.3%, as the exchange rate pass-through from the depreciation of the króna still weighs heavily in imported goods prices. At the same time, domestic goods prices have risen as well, to some extent reflecting strong domestic demand. The outlook is for inflation to measure 3.9% in Q1/2021 but then fall relatively quickly over the course of the year, as there is still a sizeable slack in the economy and the króna has appreciated in recent months.
2021-02-03

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.