Iceland's Central Bank Keeps Rates Unchanged; Won't Cut Until Inflation Is Lower

10:49 AM EST, 02/04/2026 (MT Newswires) -- Iceland's central bank (CBI) Wednesday said its Monetary Policy Committee (MPC) decided to keep its interest rates unchanged, in a unanimous decision.

The CBI's key interest rate -- the rate on seven-day term deposits -- remain 7.25%.

Inflation now measures 5.2% and has risen once again, noted the central bank in its policy statement. Although the January increase in the consumer price index is due largely to changes in public levies on new motor vehicles, price hikes are still relatively widespread.

As a consequence, underlying inflationary pressures continue to be persistent, even though economic activity has eased and there are clear signs that the labor market is cooling, it added.

Further decisions to lower interest rates will depend on clear evidence that inflation is falling back to the CBI's 2.5% inflation target, the statment noted.

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