Policy rate unchanged 12% in Iceland

iceland-central-bank-022Central Bank of Iceland interest rate decision and issuance of 28-day certificates of deposit

The Monetary Policy Committee (MPC) has decided to keep the collateral loan and deposit rates unchanged at 12% and 9.5% respectively, but cut the overnight lending rate from 16% to 14.5%.

The Central Bank has also decided to begin auctioning off 28-day certificates of deposit (CDs). The auctions will take place each week, on Wednesdays, with the first auction taking place on September 30.

In each auction, the amount sold will be ISK 15-25 billion, with bid rates ranging from a minimum of 9.5% to a maximum of 10%. Only Icelandic commercial banks may participate in the primary auction and own the securities, which are eligible for use as collateral at the Central Bank. The maximum bid is 50% of the amount on offer.

The webcast on the policy can be viewed through this link: Webcast September 24, 2009

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