Central Bank of Iceland director Davíd Oddsson announced yesterday that the policy rate would remain unchanged, at 13.75 percent. Following the decision, the ISK appreciated, the market rate of interest rose, but the value of stocks fell.
According to the research department at Landsbanki Bank, the Central Bank’s decision had a surprise affect on the market although it coincided with financial forecasts, Fréttabladid reports.
The research department at Kaupthing Bank said the Central Bank will soon be compelled to review a financial forecast on the policy rate from November 2007, which states that “[such a high policy rate] is completely illogical unless the bank is determined to affect a harsh landing for the economy.”
Iceland’s banks all predict a lower policy rate when the Central Bank makes their next interest rate announcement in April.