Statement of the Monetary Policy Committee 2 October 2024
The Monetary Policy Committee (MPC) of the Central Bank of Iceland has decided to lower the Bank’s interest rates by 0.25 percentage points. The Bank’s key interest rate – the rate on seven-day term deposits – will therefore be 9%.
Inflation has eased recently, measuring 5.4% in September. Although certain one-off items weigh heavily, the scope and frequency of price increases have tapered off. Underlying inflation has subsided as well, and the breakeven inflation rate in the bond market has fallen.
Economic activity has continued to ease in tandem with the tighter monetary stance. Furthermore, there are signs that labour market pressures have subsided, and households and businesses have grown more pessimistic.
Persistent inflation, inflation expectations above target, and strong domestic demand call for caution, however. As a result, it is necessary to maintain an appropriately tight monetary stance in order to bring inflation back to target within an acceptable time frame.
As before, near-term monetary policy formulation will be determined by developments in economic activity, inflation, and inflation expectations.
Press release no. 16/2024
2 October 2024
The interest rates will be as follows:
Overnight loans 10.75%
Seven-day collateralised loans 9.75%
Seven-day term deposits 9.00%
Current accounts 8.75%
See further: Central Bank of Iceland interest rates and reserve requirements 2 October 2024