Iceland raises rates in light of weaker króna

Central Bank of Iceland

The Central Bank of Iceland raised interest rates by 25 basis points on Wednesday after revising upwards its inflation forecast for the year as it faced a weakening króna.

The decision by the central bank's Monetary Policy Committee will see the seven-day collateralised lending rate rise to 4.5% and the overnight lending rate move to 5.5%.

The central bank said the rate hike reflected the deterioration in Iceland's inflation outlook over the next two years. Data from Statistics Iceland shows

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