The Central Bank of Iceland raised its key policy rate by 25bps for a second straight meeting to 7.75% in May 2026, with all committee members voting in favor and in line with market expectations. The decision comes amid persistent inflationary pressures and weakening economic activity. Headline inflation eased slightly to 5.2% in April 2026 after reaching over an year high rate of 5.4%, although inflation expectations continued to rise. In response to higher commodity prices and inflationary pressures following the war in Iran, the government reduced the petrol tax to 11% from 24% to ease inflation. Meanwhile, economic activity contracted by 0.6% in the fourth quarter of 2025, with the outlook expected to deteriorate further if supply disruptions persist. Despite concerns over slowing growth, the Committee signaled that it remains prepared to tighten monetary policy further while closely monitoring developments in economic activity as well as current and expected inflation. source: Central Bank of Iceland

The benchmark interest rate in Iceland was last recorded at 7.75 percent. Interest Rate in Iceland averaged 6.85 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 May of 2026.

The benchmark interest rate in Iceland was last recorded at 7.75 percent. Interest Rate in Iceland is expected to be 7.75 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 7.50 percent in 2027 and 7.00 percent in 2028, according to our econometric models.



Calendar GMT Reference Actual Previous Consensus TEForecast
2026-02-04 08:30 AM Interest Rate Decision 7.25% 7.25% 7.25%
2026-03-18 08:30 AM Interest Rate Decision 7.5% 7.25% 7.25%
2026-05-20 08:30 AM Interest Rate Decision 7.75% 7.5% 7.75%
2026-08-19 08:30 AM Interest Rate Decision 7.75%
2026-10-07 08:30 AM Interest Rate Decision
2026-11-18 08:30 AM Interest Rate Decision


Related Last Previous Unit Reference
Banks Balance Sheet 6325717.00 6282411.00 ISK Million Apr 2026
Central Bank Balance Sheet 971201.00 976218.00 ISK Million Apr 2026
Foreign Exchange Reserves 939373.00 944496.00 ISK Million Apr 2026
Interbank Rate 8.11 8.11 percent May 2026
Interest Rate 7.75 7.50 percent May 2026
Money Supply M0 137.21 184.44 ISK Billion Apr 2026
Money Supply M1 686.53 698.70 ISK Billion Apr 2026
Money Supply M2 2332.00 2322.36 ISK Billion Apr 2026
Money Supply M3 3376.35 3362.83 ISK Billion Apr 2026


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
7.75 7.50 18.00 0.75 1998 - 2026 percent Daily

News Stream
Central Bank of Iceland Raises Key Rate to 7.75%
The Central Bank of Iceland raised its key policy rate by 25bps for a second straight meeting to 7.75% in May 2026, with all committee members voting in favor and in line with market expectations. The decision comes amid persistent inflationary pressures and weakening economic activity. Headline inflation eased slightly to 5.2% in April 2026 after reaching over an year high rate of 5.4%, although inflation expectations continued to rise. In response to higher commodity prices and inflationary pressures following the war in Iran, the government reduced the petrol tax to 11% from 24% to ease inflation. Meanwhile, economic activity contracted by 0.6% in the fourth quarter of 2025, with the outlook expected to deteriorate further if supply disruptions persist. Despite concerns over slowing growth, the Committee signaled that it remains prepared to tighten monetary policy further while closely monitoring developments in economic activity as well as current and expected inflation.
2026-05-20
Iceland Central Bank Raises Key Rate to 7.50%
The Central Bank of Iceland raised its key policy rate by 25 basis points to 7.50% at its March meeting, with three members supporting the move and two favoring a larger 50 bps hike. The decision comes as most indicators point to slowing economic activity, while inflation remains elevated at 5.2% for a second straight month. Price pressures have been driven by higher public levies, second-round effects, and private sector wage increases at the start of the year, with underlying inflation reaching its highest level in over a year and expectations continuing to rise. Rising global commodity prices, particularly oil, amid tensions in the Persian Gulf have further lifted inflation expectations. Policymakers warned that a prolonged conflict could lead to broader price increases and raise the risk of wage review clauses being triggered. The MPC signaled further tightening if needed to bring inflation back to target, even at the expense of weaker economic growth.
2026-03-18
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