Central Bank of Iceland interest rate decision and issuance of 28-day certificates of deposit
The Monetary Policy Committee (MPC) has decided to keep the collateral loan and deposit rates unchanged at 12% and 9.5% respectively, but cut the overnight lending rate from 16% to 14.5%.
The Central Bank has also decided to begin auctioning off 28-day certificates of deposit (CDs). The auctions will take place each week, on Wednesdays, with the first auction taking place on September 30. In each auction, the amount sold will be ISK 15-25 billion, with bid rates ranging from a minimum of 9.5% to a maximum of 10%. Only financial institutions engaged in transactions with the Central Bank may participate in the primary auction and own the securities, which are eligible for use as collateral at the Central Bank. The maximum bid is 50% of the amount on offer.
September 24, 2009
The rationale behind the interest rate decision will be explained in a webcast at 11:00 a.m. GMT.