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
||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
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Bank rates and penalty rates
Here are metadata for banks, penalty and general interest rates of monetary claims.
Interest rates in the interbank market in ISK (%)
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.
Interest rate reference in Icelandic krónur (IKON)
The Central Bank calculates and publishes IKON (Icelandic króna overnight), 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. IKON differs from the REIBOR rate in that the latter is based on bids rather than on completed transactions.
The Central Bank began publishing the IKON reference rate on a daily basis beginning on 1 April 2022. Further information can be found at the Markets Department website.
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The Central Bank of Iceland will no longer input data for government issued bonds tables (in brackets).
Furthermore, explanatory notes on various concepts can be found here.