Governor of the Central Bank Már Guðmundsson announced that the key interest rate would decrease by 0.5 percent to 5.25 percent this morning while wearing a Christmas sweater as part of a fundraising initiative for Barnaheill – Save the Children Iceland.
The main reason for the Monetary Policy Committee’s decision is continued outlook for low inflation. Már stated he is skeptical of numbers saying economic growth will be lower than forecast as they are at odds with other economic developments, ruv.is reports.
Inflation fell to 1 percent in November and was slightly negative excluding the housing component. Low global inflation and a stable króna have contained inflation in spite of considerable wage increases, the MPC reasons in a statement.
Már reached his ISK 600,000 (USD 4,851, EUR 3,914) fundraising goal for Barnaheill’s initiative against bullying, having raised ISK 618,500 today.
