Iceland confounds expectations with rate hold

The Central Bank of Iceland surprised markets on Thursday, opting to hold rates, rather than raise them.

The benchmark weekly lending rate stands at a record high of 15.5%. However, most analysts expected borrowing costs to rise further on the back of rampant inflation, which soared from 8.7% in March to 11.8%.

But the central bank said that while further surges were likely in the short term, inflation would moderate with rates at their current level.

"Increased domestic costs due to the exch