The Central Bank of Iceland’s monetary policy committee increased its benchmark rate by 75 basis points to 2.75% on February 9.

It cited an adverse inflation forecast, which “has deteriorated markedly since the MPC’s last meeting”. The rate increase is the fifth and largest rise in a series since May 2021.

Experts said the inflation was driven in large part by a housing market with swelling asset prices and potentially problematic mortgages.

Iceland became one of the first advanced economies