Iceland

Restrictive

Policy rate

8.00%

Last move Aug 2026

Inflation

4.09%

As of null

Real policy rate

3.91%

Policy rate less inflation

Debt to GDP

53.60%

2026 est.

Inflation target2.5%

Policy rate vs target+5.5 pp

Last move+25 bps hike

Months at current rate1

Real GDP growth1.90%

Next scheduled decisionNot published

Policy rate path, latest five years. Cycle peak 18.00% (Oct 2008).

The verdict

Iceland sets its policy rate at 8.00%, against inflation of 4.09% — a real rate of 3.91% after inflation. The most recent decision was a 25bp hike in Aug 2026. The rate has held there for about 1 month. The bank targets 2.5% inflation, and prices are running above that at 4.09%; the policy rate stands 5.50 percentage points above target. On the fiscal side, the economy carries government debt of 53.6% of GDP (2026 est.) and real GDP growth of 1.9%.

Sources: policy rate and cycle history — BIS central bank policy rates (WS_CBPOL); inflation — national statistical agencies; debt and growth — IMF World Economic Outlook. Methodology: https://www.globalfinancialinfo.info/methodology/policy-rates · Dataset: https://www.globalfinancialinfo.info/global-economy · Free to print and share for non-commercial classroom use (CC BY-NC-ND 4.0).

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