Iceland Central Bank Holds Key Rate As Expected

(RTTNews) - Iceland's central bank left its benchmark interest rate unchanged at a 14-year high on Tuesday.

The Monetary Policy Committee of the Central Bank of Iceland, chaired by Governor Asgeir Jonsson, decided to hold the rate on seven-day term deposits at 9.25 percent.

The central bank has raised its key rate by a cumulative 850 basis points since May 2021.

Inflation continued to ease and inflation expectations slowed by some measures but remained above target, the bank observed.

The bank expects economic growth to slow this year as the monetary stance is tight. The positive output gap is bigger than previously estimated and inflation is projected to fall more slowly.

The MPC assessed that there is an increased probability that the current stance is sufficient to bring inflation back to target within an acceptable time frame.

"As before, monetary policy formulation will be determined by developments in economic activity, inflation, and inflation expectations," the bank said.