Iceland central bank lowers key rate to 8.0%

08:21, June 24, 2010      

Email | Print | Subscribe | Comments | Forum 

Iceland's central bank, the Sedlabanki, cut its key interest rate by a half percentage point to 8.0 percent Wednesday, according to news reports from Reykjavik.

The deposit rate, the maximum bid rate for 28-day certificates of deposit, the seven-day collateralized lending rate and the overnight lending rate will also be cut by a half percentage, the Sedlabanki said in a statement.

The Sedlabanki lowered the interest rates last time on May 5.

Since then, the krona has appreciated by five percent in trade- weighted terms and six percent against the euro and the inflation declined to 7.5 percent year-on-year in May, the Sedlabanki said.

The bank is also considering lifting capital controls further this year.

"Continued easing of monetary policy at this stage is justified by the appreciation of the krona and lower external risk premia, driven by better fundamentals and improved access to foreign liquidity through multilateral and bilateral agreements," the Sedlabanki said.

"These developments should facilitate the eventual removal of capital controls. The first steps towards complete liberalization of the capital account could be taken relatively soon after the Third Review of the IMF-supported program is completed," it added.

The Sedlabanki had raised its main interest rate to 18 percent in late 2008 when Iceland's financial system collapsed as a result of the global financial crisis.



  • Do you have anything to say?


Special Coverage
  • Premier Wen Jiabao visits Hungary, Britain, Germany
  • From drought to floods
Major headlines
Editor's Pick
  • A man visits "Thy Word Is Truth, the Bible Ministry Exhibition of the Protestant Church in China", during its opening at Mount Vernon Place United Methodist Church in Washington DC, capital of the United States, Sept. 28, 2011. Through the Bible's various Chinese versions, ancient or modern, as well as pictures, paintings, calligraphy, art works and historical documents, the exhibition was expected to give an overall understanding of how Bible was brought into China, how it was translated, published, distributed and loved. (Xinhua/Zhang Jun)
  • A visitor passes by in the exhibition of Istanbul design week on Sept. 28, 2011 in Istanbul, Turkey. Istanbul design week will be hosting designers and design exhibitions from around the world in Istanbul from Sept 28 to Oct 2 with the participation of 25 countries. (Xinhua/Ma yan)
  • Red flag flies at the Jiuquan Satellite Launch Center in northwest China's Gansu Province, Sept. 28, 2011. A spokesperson with China's manned space program said Wednesday that fuel has been injected into the Long March-2FT1 carrier rocket in preparation for launching the Tiangong-1 space module Thursday evening as planned. (Xinhua/Wang Jianmin)
  • A militant loyal to the Libyan National Transitional Council (NTC) waves in a tank near Bani Walid, one of the pro-Muammar Gaddafi strongholds, on Sept. 28, 2011. (Xinhua/Hamza Turkia)
  • Jewish worshippers pray at the Western Wall, Judaism's holiest prayer site, in Jerusalem's Old City on Sept. 28, 2011, ahead of Rosh Hashanah, the two-day Jewish new year which will begin at sunset on Sept. 28 and conclude at nightfall on Sept. 30. (Xinhua/Muammar Awad)
  • High school student Johanna Choapa is helped by her father after announcing the end of hunger strike in Santiago, capital of Chile, on Sept. 28, 2011. The end of the strike took place to make way for a dialogue with the government, seeking to resolve the four-month crisis in the education sector. (Xinhua/Jorge Villegas)
Hot Forum Discussion