17 December 2008

Changes to Central Bank of Iceland interest rates

The Board of Governors of the Central Bank of Iceland has decided to increase the spread between the Bank's highest and lowest interest rates. Interest rates on financial institutions' current accounts with the Central Bank will be reduced from 17.5% to 15% effective December 21, interest on overnight loans will rise from 20% to 22% effective December 18, and interest on certificates of deposit and term deposits will be reduced from 17.75% to 15.25% effective December 29.

These changes do not entail a change in the Bank's monetary policy. The Central Bank of Iceland's policy interest rate will remain unchanged at 18%. The interest rate changes are intended, however, to promote increased activity in the interbank market with krónur.

No. 49/2008
December 17, 2008