Key interest rate

The Central Bank conducts monetary policy largely by affecting money market interest rates, mainly through the interest rates on the facilities it offers to credit institutions, which then affect other market rates. The Bank’s key interest rate (sometimes called the policy rate) is the rate on these facilities that is the primary determinant of short-term market rates and therefore of the monetary stance. At present, the Bank’s key rate is its seven-day term deposit rate.

 

Key interest rate (policy rate)

The interest rate that has the strongest effect on short-term market rates and is therefore considered the Central Bank’s key rate may change from time to time. Prior to the financial crisis of autumn 2008, the Bank’s key rate was the rate on its collateralised loans to financial institutions. In the wake of the crisis, however, demand for Central Bank loans has been limited, and credit institutions have increased their deposits with the Bank. As a result, the interest rate on the Bank’s deposits has had greater influence on money market rates since 2009.

CBI's interest rates


Summary of the Central Bank of Iceland’s key interest rate

Period:
Key interest rate:
Until April 2009
Collateralised lending rate
April to September 2009
Current account rate
October 2009 to 21 May 2014
Simple average of the current account rate and  maximum rate on 28-day certificates of deposit
From 21 May 2014
Seven-day term deposit rate
 

Supervisor

Markets | middle@cb.is

 

Bank rates and penalty rates

 

Metadata

Here are metadata for banks, penalty and general interest rates of monetary claims.

Penalty rates
From 01.8.208.75%

Supervisor

Statistics | fjarmalafyrirtaeki@sedlabanki.is

 

Market rates

Interest rates in the interbank market in ISK

12.8.20REIBIDREIBOR
O/N0.563%0.813%
S/W0.750%1.000%
1 M0.863%1.238%
3 M1.088%1.588%


Central Bank to discontinue 9- and 12-month REIBOR listings

Effective 1 July 2020, the Central Bank will discontinue listing 9- and 12-month interest rates in the interbank market for krónur (the REIBOR market). See the Bank’s news release dated December 18, 2019.


Supervisor

Markets | frontoffice@cb.is

 

The Central Bank of Iceland will no longer input data for government issued bonds tables (in brackets).

Instead, we refer to the Government Debt Management website, www.lanamal.is/en

Further information regarding government bills is given by lanamal@lanamal.is

 

Furthermore, explanatory notes on various concepts can be found here.