The Central Bank of Iceland’s Monetary Policy Committee (MPC) kept its key policy rate steady at 7.25% during its February 2026 meeting, maintaining the lowest level since February 2023, following a 25 bps cut in November 2025. The decision reflects a shift in the economic landscape, with GDP growth expected to remain subdued and the long-term inflation outlook projected to remain broadly unchanged. Despite slower economic activity and signs of a cooling labor market, underlying inflationary pressures continue to persist. The annual inflation rate climbed to 5.2% in January 2026, from 4.5% in the previous month, marking the highest reading since September 2024. The Central Bank emphasized that any future rate cuts will hinge on clear evidence that inflation is returning toward its 2½% target. Policymakers also noted that near-term monetary policy will continue to be guided by evolving trends in economic activity, inflation, and inflation expectations. source: Central Bank of Iceland

The benchmark interest rate in Iceland was last recorded at 7.25 percent. Interest Rate in Iceland averaged 6.84 percent from 1998 until 2026, reaching an all time high of 18.00 percent in October of 2008 and a record low of 0.75 percent in November of 2020. This page provides - Iceland Interest Rate - actual values, historical data, forecast, chart, statistics, economic calendar and news. Iceland Interest Rate - data, historical chart, forecasts and calendar of releases - was last updated on February of 2026.

The benchmark interest rate in Iceland was last recorded at 7.25 percent. Interest Rate in Iceland is expected to be 7.25 percent by the end of this quarter, according to Trading Economics global macro models and analysts expectations. In the long-term, the Iceland Interest Rate is projected to trend around 5.00 percent in 2027, according to our econometric models.



Calendar GMT Reference Actual Previous Consensus TEForecast
2025-10-08 08:30 AM Interest Rate Decision 7.5% 7.5% 7.5%
2025-11-19 08:30 AM Interest Rate Decision 7.25% 7.5% 7.5%
2026-02-04 08:30 AM Interest Rate Decision 7.25% 7.25% 7.25%
2026-03-18 08:30 AM Interest Rate Decision 7.25% 7.25%
2026-05-20 08:30 AM Interest Rate Decision
2026-08-19 08:30 AM Interest Rate Decision


Related Last Previous Unit Reference
Banks Balance Sheet 6165656.00 6249242.00 ISK Million Dec 2025
Central Bank Balance Sheet 991557.00 1001939.00 ISK Million Jan 2026
Foreign Exchange Reserves 958131.00 968197.00 ISK Million Jan 2026
Interbank Rate 7.58 7.58 percent Feb 2026
Interest Rate 7.25 7.25 percent Feb 2026
Money Supply M0 153.71 110.90 ISK Billion Dec 2025
Money Supply M1 705.12 712.33 ISK Billion Dec 2025
Money Supply M2 2260.53 2271.89 ISK Billion Dec 2025
Money Supply M3 3248.69 3285.22 ISK Billion Dec 2025


Iceland Interest Rate
In Iceland, the benchmark interest rate is set by the board of Governors of the Central Bank of Iceland (Seðlabanki Íslands). The main interest rate is the seven-day term deposit rate since May 2014. Previously the Bank’s key rate was the rate on its collateralised loans to financial institutions, but in the wake of the crisis the interest rate on the Bank’s deposits had greater influence on money market, as demand for Central Bank loans had been limited. Therefore the Bank’s key interest rate is the rate on seven-day term deposits.
Actual Previous Highest Lowest Dates Unit Frequency
7.25 7.25 18.00 0.75 1998 - 2026 percent Daily

News Stream
Central Bank of Iceland Keeps Key Rate Unchanged
The Central Bank of Iceland’s Monetary Policy Committee (MPC) kept its key policy rate steady at 7.25% during its February 2026 meeting, maintaining the lowest level since February 2023, following a 25 bps cut in November 2025. The decision reflects a shift in the economic landscape, with GDP growth expected to remain subdued and the long-term inflation outlook projected to remain broadly unchanged. Despite slower economic activity and signs of a cooling labor market, underlying inflationary pressures continue to persist. The annual inflation rate climbed to 5.2% in January 2026, from 4.5% in the previous month, marking the highest reading since September 2024. The Central Bank emphasized that any future rate cuts will hinge on clear evidence that inflation is returning toward its 2½% target. Policymakers also noted that near-term monetary policy will continue to be guided by evolving trends in economic activity, inflation, and inflation expectations.
2026-02-04
Iceland Unexpectedly Cuts Key Rate to 7.25%
The Central Bank of Iceland’s Monetary Policy Committee unexpectedly lowered the key interest rate by 25 bps to 7.25% during its November 2025 meeting, marking the fourth reduction this year, and pushing borrowing costs to their lowest since February 2023. This comes as domestic demand growth has slowed under a tight monetary stance, and the positive output gap appears to have closed. GDP growth is projected to decelerate more than previously expected due to export shocks and turbulence in the mortgage market following a Supreme Court ruling. Meanwhile, headline inflation rose to 4.3% in October, up 0.2 points from September, and has remained near 4% for almost a year, with underlying inflation following a similar path. The Committee noted that tighter household borrowing conditions support the rate cut, but further reductions will depend on inflation returning to the 2½% target. Policy will continue to be guided by developments in economic activity, inflation, and expectations.
2025-11-19
Central Bank of Iceland Holds Key Rate at 7.5%
The Central Bank of Iceland maintained its key policy rate at 7.5% during its October 2025 meeting, signaling a cautious approach amid persistent inflation. Headline inflation rose to 4.1% in September, the highest in three months, from 3.8% in August and well above the central bank’s 2.5% target. While recent quarters have shown slowing economic activity and easing demand pressures, the economy has remained relatively resilient. Wage growth continues to be strong, and although inflation expectations have moderated recently, they still remain above the target. The central bank emphasized that near-term policy decisions will continue to depend on developments in economic activity, inflation, and inflation expectations.
2025-10-08