Central Bank Monetary Policy Meeting

The Monetary Policy Committee’s latest decision and its implications for households.

On 7 October, the Central Bank of Iceland decided to keep its key interest rate unchanged at 8%. The decision was unanimous.

According to the bank’s statement, inflation stands at 5.9%. Although economic activity is slowing, the bank considers inflation too high to cut rates.

For households with loans, high interest rates can mean continued pressure on repayments. The effect varies depending on whether a loan carries a fixed or variable rate.

The policy rate is an interest rate used by the central bank to influence prices and economic activity. It is not necessarily the rate paid by households.

Source: Original source

What do interest-rate changes mean for households?

Changes in interest rates can affect variable-rate loan repayments, savings and investment. The timing and scale of those effects depend on loan terms.

An assessment of household finances should also consider inflation, purchasing power and debt levels, rather than focusing on one interest-rate figure.