The Central Bank of Iceland held its seven-day term deposit rate at 4.5 percent on December 12th, as widely expected, saying that the króna depreciation and concerns about upcoming wage settlements have shown in expectations of a further rise in inflation while GDP growth for the first nine months of the year came in stronger than expected. Policymakers also noted that if inflation expectations continue to rise and remain persistently at a level above the target, it will call for a tighter monetary stance. Interest Rate in Iceland averaged 7.62 percent from 1998 until 2018, reaching an all time high of 18 percent in October of 2008 and a record low of 4.25 percent in February of 2011.
Interest Rate in Iceland is expected to be 4.50 percent by the end of this quarter, according to Trading Economics global macro models and analysts expectations. Looking forward, we estimate Interest Rate in Iceland to stand at 4.50 in 12 months time. In the long-term, the Iceland Interest Rate is projected to trend around 4.25 percent in 2020, according to our econometric models.