Financial News: Iceland Central Bank Holds Key Rates

Iceland Central Bank Holds Key Rates

08/20/2025 - 09:16:00 (RTTNews)

(RTTNews) - Iceland's central bank retained its key interest rates on Wednesday as inflationary pressures remain despite a slowdown in inflation.

The Monetary Policy Committee of the Central Bank of Iceland unanimously decided to keep the seven-day term deposit rate unchanged at 7.50 percent.

"Further interest rate cuts will depend on whether inflation moves closer to the Bank's 21/2% target," the bank said in a statement.

Headline inflation softened to 4 percent in July. But it will rise again in the months ahead and then start to ease in early 2026, the committee said.

In line with tight monetary policy stance, growth in domestic demand subsided and capacity pressures in the economy eased.

Even so, economic activity still appears relatively robust, wages have risen markedly, and inflation expectations remain above target, policymakers said.

Despite the fall in inflation and inflation expectations, inflationary pressures remain, the committee observed.

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