The Monetary Policy Committee (MPC) of the Central Bank of Iceland has decided to lower the Bank’s interest rates by 0.25 percentage points. The Bank’s key interest rate, the rate on seven-day term deposits, will therefore be 3.25%. The decision comes only one month after the bank lowered its interest rates by 0.25% from 3.75% to 3.5%.
“Leading indicators imply that economic activity will continue to slow, although there are signs that the economy may be regaining a foothold,” stated a press release from the Central Bank. “Recent developments suggest that economic activity has been stronger than previously assumed. On the other hand, the outlook is uncertain, particularly for the global economy. As a result, domestic GDP growth could weaken more rapidly than is currently expected.”