Iceland central bank raises rate to 6 percent

Iceland’s central bank on Wednesday raised its main interest rate for the fifth time since May to combat rising inflation, though prices have risen less than previously feared, it said. Sedlabanki said it lifted the rate by 0.25 percentage points to 6.0 percent following hikes in May, June, August and October. Inflation picked up slightly in October, to 9.4 percent, but has fallen by 0.5 percentage points from its July 2022 peak. It is forecast to average around 9.4 percent in the fourth quarter, the bank said. It noted that the Icelandic currency, the krone, had depreciated since its last meeting in October.

In addition, “indicators imply that inflation expectations have become less firmly anchored to the target, and it could therefore take longer than it would otherwise to bring inflation back to target.”