The Central Bank of Iceland has decided to raise the reference rate again, increasing it by 0.25% and thus bringing it to 1.25%. This is the second touch up in three months. The move follows the improvement in macro indicators. According to his latest estimates, Iceland’s GDP is expected to grow by 4% this year, about 0.9 percentage points above the May forecast. The improvement, the institute explained, is mainly driven by tourist arrivals, which increased faster than expected this summer.
Inflation is at 4.4% in the second quarter of 2021, but overall inflationary pressures appear to be easing. According to the Central Bank of Iceland, it could remain above 4% until the end of the year, but it will align with the target in the second half of 2022.