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Iceland Signals More Hikes After Rate Hits Six-Year High

  • Central bank says more rate hikes needed to curb price gains
  • Tourism-fueled growth is seen pushing inflation close to 11%
Updated on

Iceland’s central bank raised borrowing costs to a six-year high and indicated more tightening to come, as a rebound in tourist arrivals as well as exuberance in the housing market are set to push inflation above 10% for the first time in more than two decades. 

The 7-day term deposit rate was increased by 75 basis points to 5.5% on Wednesday, in line with market expectations.