Financial News: Iceland Unexpectedly Cuts Policy Rate By 25 Bps

Iceland Unexpectedly Cuts Policy Rate By 25 Bps

11/19/2025 - 07:41:00 (RTTNews)

(RTTNews) - Iceland's central bank lowered its key interest rate unexpectedly as the economy is expected to recover more slowly than previously anticipated due to worsening prospects for exports. The Monetary Policy Committee of the Central Bank of Iceland, led by Governor Ásgeir Jónsson, unanimously decided to cut the rate on seven-day term deposits by 25 basis points to 7.25 percent.

Markets expected the bank to hold the rate at 7.50 percent. The bank had last reduced the rate by a quarter-point in May.

Policymakers observed that inflation has remained close to 4 percent for nearly a year. Underlying inflation also developed in broadly the same manner.

The economic growth is projected to slow more than previously estimated due to the series of export sector shocks and the turmoil in the domestic mortgage market following the recent Supreme Court decision.

Consequently, the bank expects inflation to subside more rapidly than previously assumed. Pay rises are still sizeable, and inflation expectations continue to measure above target, the bank said.

The committee considered it appropriate to offset this tightening by lowering interest rates. However, policymakers said further decisions to lower interest rates will depend on clear evidence that inflation is falling back to the Bank's 2.5 percent inflation target.

For comments and feedback: contact editorial@rttnews.com

Market News provided by RTTNews

RECENT INTERNATIONAL FINANCIAL NEWS

Portugal Inflation Unrevised At 2.2% (59 min(s), 06 sec(s) ago)
(RTTNews) - Portugal's consumer price inflation moderated slightly as initially estimated in N ...Full Story»

Spain Inflation Confirmed At 3.0% (28 min(s), 54 sec(s) ago)
(RTTNews) - Spain's consumer price inflation slowed slightly as initially estimated in Novembe ...Full Story»

UK Economy Unexpectedly Shrinks In October (01 hr(s), 09 min(s), 54 sec(s) ago)
(RTTNews) - The UK economy experienced an unexpected contraction in October, as uncertainty ahead ...Full Story»

India Inflation Rises To 0.71% In November (01 hr(s), 46 min(s), 54 sec(s) ago)
(RTTNews) - India's consumer price inflation increased somewhat in November after easing to a ...Full Story»

German Inflation Confirmed At 2.3% (02 hr(s), 37 min(s), 54 sec(s) ago)
(RTTNews) - Germany's consumer price inflation remained unchanged in November, as initially es ...Full Story»

French Inflation Confirmed At 0.9% (02 hr(s), 39 min(s), 54 sec(s) ago)
(RTTNews) - France's consumer price inflation held steady as initially estimated in November, ...Full Story»

Amended: Slovakia Construction Output Growth Eases Sharply (02 hr(s), 56 min(s), 54 sec(s) ago)
(RTTNews) - Slovakia's construction production growth moderated significantly in October to th ...Full Story»

Romanian Inflation Remains Stable At 9.8% (04 hr(s), 22 min(s), 54 sec(s) ago)
(RTTNews) - Romania's consumer price inflation held steady in November after easing in the pre ...Full Story»