Key interest rate

The Central Bank implements monetary policy mainly by affecting money market interest rates. It does this primarily through its determination of 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. Currently, this is the rate on credit institutions’ seven-day term deposits with the Central Bank.

 

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. Before the financial crisis in autumn 2008, the Bank’s key rate was generally considered to be the rate on its collateralised loans to credit institutions. Since the crisis, however, demand for Central Bank loans has been limited, and credit institutions have increased their deposits with the Bank. As a result, interest rates on deposits with the Bank have had greater impact on money market interest rates since 2009.

Below are data on Central Bank interest rates. Information on additional interest rate series can be accessed by clicking on “View data.”

CBI's interest rates (%)

 

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

Period:
Key interest rate:
Through 7 April 2009
Collateralised lending rate
8 April 2009 through 29 September 2009
Current account rate
30 September 2009 through 20 May 2014
Simple average of the current account rate and  maximum rate on 28-day certificates of deposit
Since 21 May 2014
Seven-day term deposit rate
 

Supervisor

Markets | middle@cb.is

 

Bank rates and penalty rates

According to the Act on Interest and Price Indexation, no. 38/2001, the Central Bank of Iceland publishes monthly announcements of penalty interest and interest on monetary claims. In addition, the Bank publishes monthly summaries of month-end interest rates.

Reference interest rates on loans according to Article 18 of the Act on Interest and Price Indexation, no. 38/2001, with subsequent amendments according to Act no. 151/2010, can be found above.

Monthly interest rate announcements (announcements of penalty interest and interest on monetary claims) can be found in the Central Bank news archive: News and announcements. 

Penalty rates
Since 01.2.2417.00%

Metadata

Metadata for banks interest rates, penalty interest, and general interest rates on monetary claims.

Supervisor

IT & Statistics | support@sedlabanki.is

 

Market rates

Interest rates in the interbank market in ISK (%)

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

The Central Bank discontinued its listings of 9- and 12-month interest rates in the interbank market for krónur (REIBOR) on 1 July 2020. See the Bank’s news release dated December 18, 2019.

 

Interest rate reference in Icelandic krónur (IKON)

The Central Bank calculates and, since 1 April 2022, has published the IKON (Icelandic króna overnight) reference interest rate, which is the interest rate on unsecured overnight deposits denominated in Icelandic krónur and held by obliged entities. The interest rate is calculated from the agreements financial institutions make with their customers when they accept deposits at fixed rates for fixed commitment periods. The IKON rate is unlike the REIBOR rate in that IKON is based on actual trades, whereas REIBOR was based on bids.

Further information can be found at the Markets Department website.

View data

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  • Corrections

     

    Correction: 17th November 2023

    In November, the Bank published corrected information on IKON interest rates and turnover for 15 dates starting from the beginning of 2022. The correction was necessary due to a software error that resulted in incorrect calculations of the weight of individual trades in 15 instances. Information on interest rates and turnover has been corrected, but because of the software error in question, interest rate values were marginally lower (by 0.002-0.037 percentage points) than they should have been in those 15 instances. The dates affected are all specially labelled in the data.

Supervisor

Markets | frontoffice@cb.is

 

Information on foreign interest rates

The Central Bank has received numerous queries about foreign interest rates, LIBOR rates in particular. For further information, see the International Exchange Benchmark Administration website. The Central Bank of Iceland cannot be held liable, however, for information found on such websites or for other parties’ use of such information; furthermore, the Bank wishes to remind the reader of the general disclaimer concerning the reliability of data on the internet, which can be found on the Copyright and Disclaimer page on this website.

Furthermore, explanatory notes on various concepts can be found on Central Bank's website.