The Board of Governors of the Central Bank of Iceland has decided to raise the Bank’s policy interest rate by 0.75 percentage points to 13% as of July 11, 2006. Other Central Bank interest rates will be raised on July 11, the rate on overnight loans and required deposits by 0.5 percentage points and other rates by 0.75 percentage points. In its Monetary Bulletin, which is published on the Bank’s website after 11 a.m. today, the Bank presents the arguments in support of raising the policy rate now.

The Board of Governors has also decided to assess the need for further monetary restraint in the middle of August and announce a decision on interest rates on August 16, 2006.

The next subsequent interest rate decision of the Board will be announced on Thursday September 14 according to the previously issued schedule of interest rate decision dates.

No. 26/2006

July 6, 2006