Latest from Central Bank: Interest Rates to Increase 0.25%, Now Resting at 6%

inflation rate iceland

The Monetary Policy Committee of the Central Bank of Iceland has announced today that key interest rates will be raised an additional 0.25%, with short-term interest rates (seven day term deposits), now sitting at 6%.

Read more: Key Interest Rates Increased 0.25%

The increase in interest rate comes in response to October inflation, which rose slightly to 9.4% from September’s level of 9.3%. Previous raises to the interest rate were introduced in order to cool the market and fight inflation, but have not had the entire effect hoped for.

Interest rates in Iceland now rest at:

  • Overnight loans 7.75%
  • Seven-day collateralised loans 6.75%
  • Seven-day term deposits 6.00%
  • Current accounts 5.75%

With the Central Bank’s aim of stabilising prices, it has noted that price increases continue to be widespread, but that they hope to reduce inflation to 4.5% by the end of 2023.

Read more: September Inflation Rate Drops

In the Central Bank report, it is stated that the Icelandic króna has seen a depreciation since October, and that inflation rates in the bond market have also risen since last month.

With the new measures in place, the Central Bank reports an improved economic outlook for 2023, with an expected 2.8% growth in GDP, up from its previous estimate of 1.9%.  This growth is accounted for by higher levels of domestic demand than previously forecast.

The Central Bank has also stressed the importance of developments in the labour market in bringing inflation back to acceptable levels, a reference to the previously postponed and now upcoming wage negotiations between many of Iceland’s largest trade unions and SA, the Confederation of Icelandic Employers.

 

Finnish PM Sanna Marin on Official Visit to Iceland

finnish pm sanna marin iceland

Finnish PM Sanna Marin is on an official state visit to Iceland. On the agenda for her meetings with Icelandic PM Katrín Jakobsdóttir are the energy transition, climate change, Nordic cooperation, and the War in Ukraine.

Finland, in the wake of the Russian invasion of Ukraine, has applied for membership in NATO, to which Iceland has belonged since its 1949 foundation. Previously neutral, the invasion has forced Finland to reassess its security situation, which will now be the topic of talks between the two PMs.

Among the several events and roundtables the Finnish PM has attended include a talk at the Nordic House and a “lunch-time chat” at the National Museum of Iceland.

Read more: Iceland Would Support Finland Joining NATO

Though Finland has remained officially neutral for decades, it has in the past cooperated with NATO exercises and projects. This past May, it officially announced its intention to apply for NATO membership, alongside fellow Nordic nation Sweden, which had also been neutral.

PM Sanna Marin also spoke about the importance of women in positions of power, calling it a great need. Even in Europe, few women are in leadership positions, but she identified the Nordic nations as leading forces in this regard. Icelandic PM Katrín Jakobsdóttir likewise spoke to the importance of having people with diverse backgrounds in leadership positions, and for people with different experiences to be heard and recognised.

Katrín Jakobsdóttir also highlighted the common commitment shared by the Nordic nations to social-democratic ideals: “We have open debates and we have strong national assemblies in our communities. This is not least important because we are seeing certain democratic setbacks. Not only in distant countries, but in Europe as well. These values of the Nordic countries are more important than ever.”

Agreeing that the Nordics share much in terms of history and culture, the Finnish PM stated that Iceland and Finland stand to learn much from one another. Joking, she also stated: “Of course, even though Iceland isn’t a part of the EU, it’s always welcome.”

Building on the strong history of cooperation, Katrín Jakobsdóttir cited research, development, and education as fields to be further improved between the nations.

Notably, Iceland was one of he first nations to openly support Finland and Sweden’s NATO applications, which are still pending approval.

President Raises Goal to 1,500 Ramps

ramps downtown Reykjavík

President of Iceland Guðni Th. Jóhannesson raised the target goal of Ramp Up Iceland at a press event for the organisation this Monday, November 21, from 1,000 new ramps to 1,500.

The president “heckled” Ramp Up founder Haraldur Þorleifsson, interrupting his presentation by spray-painting over the poster with his new, more ambitious goal. 

Ramp Up Iceland is an initiative which aims to increase accessibility to people in wheelchairs throughout Iceland. Ramp Up coordinates between businesses, contractors, and state and city authorities to make applying for permits and grants easier. Ramp Up originally had a goal of 1,000 handicap-accessible ramps in Iceland by 2026, but this goal has now been raised to 1,500.

Haraldur Þorleifsson, a Twitter employee, is notable as one of Iceland’s highest taxpayers. The founder of the Ramp Up initiative, he has used his income from the sale of his company Ueno to Twitter to fund this philanthropic project, among other things. Haraldur is also noteworthy as an outspoken proponent of Iceland’s social system, choosing to pay income instead of capital gains tax on the Ueno sale, citing the many advantages he has received through his Icelandic education and healthcare.

The Ramp Up press event took place in Mjódd, a bus station, in celebration of the 300th ramp built under the initiative.

During the event, the president asked if 1,000 ramps would be enough, and interrupted Haraldur to spraypaint over his previous goal.

In response, Haraldur stated: “Guðni is of course the president, so when he says something, we have to listen.” He continued: “We all live in a community together, and when people need help, then we all have a responsibility to help out. I am just happy to be able to contribute.”

Many businesses and public places throughout Iceland remain inaccessible to people in wheelchairs, especially older buildings. Haraldur has, however, stated that the overall reaction to his initiative has been very positive.