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Investing.com -- Iceland’s central bank kept its key interest rate unchanged at 7.50% on Wednesday, as inflation rose to 4.1% in September.
The Monetary Policy Committee (MPC) of the Central Bank of Iceland voted unanimously to maintain the rate on seven-day term deposits at 7.50%, according to a statement released by the bank.
Inflation increased by 0.3 percentage points from August to September, reaching 4.1%. The bank noted this rise was anticipated and primarily due to unfavorable base effects.
The Icelandic economy has shown signs of slowing in recent quarters, with demand pressures easing in response to the tight monetary stance. Despite this slowdown, the economy remains "fairly resilient" with sizeable wage increases, the central bank said.
While inflation expectations have decreased recently, they still remain above the bank’s 2.5% target.
The central bank indicated that further interest rate cuts would depend on inflation moving closer to its target. Monetary policy decisions will continue to be guided by developments in economic activity, inflation, and inflation expectations.
Other interest rates set by the bank include overnight loans at 9.25%, seven-day collateralized loans at 8.25%, and current accounts at 7.25%.
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