Another raise in Bank's interest rates

06.10.2021 - 11:02
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 Mynd: Anton Brink - RÚV
The Monetary Policy Committee (MPC) of the Central Bank of Iceland has decided to raise the Bank's interest rates by 0.25 percentage points. The Bank's key interest rate will therefore be 1.5%.

The biggest contributing factor to this decision was a rise in the inflation to 4,4% in September. The statement also reads that housing accounted for a large share of headline inflation in September, which continued to increase, while underlying inflation continued to ease.

The Committee also looks at temporary supply-chain disruptions due to covid, which caused large increases for both production and transport costs, potentially to last longer than anticipated.

It is mentioned in the statement that GDP growth was slightly weaker in the first half of 2021 than was forecast in the August. On the other hand, there are indications of a continued strong domestic economic recovery in the third quarter, and the GDP growth outlook for 2021 as a whole is broadly unchanged.

The increase was anticipated by the market.

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