Statements of the Monetary Policy Committee and the Financial Stability Committee
The Financial Stability Committee and the Monetary Policy Committee of the Central Bank of Iceland have held meetings this week. The spread of the COVID-19 pandemic and measures adopted both in Iceland and abroad in an attempt to slow the spread of the virus have a negative impact on the economic outlook and financial conditions. The Committees have considered the mitigating measures that they could take in response to this situation. The domestic economy and financial system are both well prepared to face shocks, and the Committees are prepared to use the policy instruments at their disposal in order to mitigate the adverse impact of this shock.
The Monetary Policy Committee (MPC) of the Central Bank of Iceland has decided to lower the Bank’s interest rates by 0.50 percentage points. The Bank’s key interest rate – the rate on seven-day term deposits – will therefore be 1.75%.
The Financial Stability Committee of the Central Bank of Iceland has decided to reduce the countercyclical capital buffer on financial institutions from 2% to 0%.
Memorandum on the Countercyclical Capital Buffer 18 March 2020 (In Icelandic).
The interest rates will be as follows:
1. Overnight loans 3.50%
2. Seven-day collateralised loans 2.50%
3. Seven-day term deposits 1.75%
4. Current accounts 1.50%
5. Minimum required reserves, fixed requirement 0.00%