Central Bank of Iceland changes course with 50bp cut
Reversal of tightening cycle reflects concern inflation is not rising as expected
Having previously bucked the trend of advanced-economy central banks cutting rates ever lower, the Central Bank of Iceland has now reversed course, knocking 50 basis points off its headline rate.
As such, the seven-day term deposit rate is now 5.25%, unwinding part of the central bank's latest tightening cycle, which began in June 2015 and continued until November.
In making the decision, the central bank cited below-target inflation, which dropped to just 1.1% in July despite large pay
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