Iceland's central bank left its interest rates unchanged for the fifth time in June.
The Sedlabanki held the seven-day collateralized lending rate unchanged at 6.00 percent. "The accommodative monetary stance has supported the economic recovery in the recent term," the bank said.
GDP growth appears to have been somewhat weaker in the first quarter than was forecast in the May issue of Monetary Bulletin, the bank said in a statement. "It is too early to assert that the growth outlook for the year as a whole has deteriorated," the bank added.
In May, the central bank cut the growth forecast for this year to 1.8 percent from 2.3 percent seen in February. The growth projection for 2014 was lowered to 3 percent from 3.7 percent.
The most recent indicators of demand suggest that the economic recovery is developing broadly in line with forecast, the bank noted. Meanwhile, underlying inflation and inflation expectations have declined as well but remain above target, it added.
Taking note of the greater exchange rate stability, the bank said its foreign exchange market intervention policy is conducive to providing a firmer anchor for inflation expectations and promoting more rapid disinflation.
It urged the Treasury to bring finances into balance as soon as possible in order to support the economy.
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May 01, 2026 15:54 ET Central banks dominated the economics news flow this week with almost all major ones announcing their latest policy decisions and many boosted expectations for a rate hike in June. In other news, several countries released the preliminary data for first quarter economic growth. In the U.S., comments by Fed Chair Jerome Powell were also in focus as his term ends this month.