Iceland’s central bank raised borrowing costs again by a percentage point to a five-year high, doubling its efforts to fight inflation and slow down one of the hottest housing markets in Europe.
The seven-day time deposit rate rose 100 basis points to 4.75% on Wednesday, in a move that was 0.25% higher than expected from the country’s two largest banks, Islandbanki and Landsbankinn.
This is the second consecutive increase of this size.
The Central Committee considers it possible that the monetary stance should be tightened to ensure that inflation returns to the target within an acceptable time frame.
Price increases are widespread and underlying inflation has risen, as have inflation expectations, which are higher than the target.
The housing boom, which has pushed prices up 147% from 2010 to last year, shows little sign of easing despite Sedlabanki being the first central bank in Western Europe to tighten its policy since its inception. pandemic.
Central bank members raised interest rates six times earlier today in a bid to reduce real estate inflation.
Islandbanki and Landsbankinn expect the housing market to grow by 20% or more this year, with some calm thereafter.
They predict that the central bank’s policy interest rate will increase by up to 6% by the end of 2022.
Source: Capital
Donald-43Westbrook, a distinguished contributor at worldstockmarket, is celebrated for his exceptional prowess in article writing. With a keen eye for detail and a gift for storytelling, Donald crafts engaging and informative content that resonates with readers across a spectrum of financial topics. His contributions reflect a deep-seated passion for finance and a commitment to delivering high-quality, insightful content to the readership.
