Consumers Association Criticizes Policy Rate Increase Skip to content

Consumers Association Criticizes Policy Rate Increase

Chairman of the Consumers Association of Iceland (NS) Jóhannes Gunnarsson has criticized the decision of Iceland’s Central Bank to raise the policy rate to 15 percent yesterday, saying the public will not benefit from the move.

“I am very concerned about the situation. Many homes are on the verge of bankruptcy so the government, which is supposed to look out for their interest, has to take action,” Gunnarsson told 24 Stundir.

Food prices are set to rise by up to 20 percent in the near future.

In regards to raising the policy rate Gunnarsson said, “It’s the same story all over again. Are the homeowners supposed to bleed to death? It’s very bad news for consumers; the situation of households will not improve.”

Gunnarsson argued that while the ISK appreciates and the inflation decreases, homeowners will have to pay even higher interest rates for their mortgages. “I cannot see how this is a good solution.”

Finnur Árnason, director of Hagar, which operates supermarket chains like Bónus, Hagkaup and 10-11, agrees with Gunnarsson. “Increased costs for companies, due to higher interest rates or otherwise, will influence pricing. The policy interest increase will also have a negative impact on the disposable income of households.”

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