20 March 2024

Statement of the Monetary Policy Committee 20 March 2024

The Monetary Policy Committee (MPC) of the Central Bank of Iceland has decided to keep the Bank’s interest rates unchanged. The Bank’s key interest rate – the rate on seven-day term deposits – will therefore remain 9.25%.

Inflation eased slightly in February, to 6.6%. Underlying inflation has also eased but, like headline inflation, is well above the inflation target. Inflation expectations are also above target, which could indicate that inflation will remain persistent.

Statistics Iceland’s recently revised national accounts show that GDP growth was stronger in recent years than was indicated by earlier figures. The positive output gap therefore appears to be larger than previously estimated. Economic activity continues to ease, however, as the monetary stance is tight.

Uncertainty has receded with the signing of private sector wage agreements. However, demand pressures in the economy could lead to more wage drift than would otherwise occur. Furthermore, fiscal measures could increase demand and inflationary pressures.

As before, near-term monetary policy formulation will be determined by developments in economic activity, inflation, and inflation expectations.

Press release no. 7/2024
20 March 2024

The interest rates will be as follows:

1. Overnight loans 11.0%
2. Seven-day collateralised loans 10.0%
3. Seven-day term deposits 9.25%
4. Current accounts 9.0%

See further

Central Bank of Iceland interest rates and reserve requirements 20 March 2024