Iceland Interest Rate
Central bank policy rate — the main rate a central bank uses to steer monetary conditions.
Interest Rate in Iceland was unchanged at 8.00 percent in Sep 2026.
Iceland Interest Rate — History
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Iceland Interest Rate — analysis in simple words
Latest reading
Interest Rate in Iceland was unchanged at 8.00 percent in Sep 2026.
Over the last three months it rose once and was unchanged twice.
Recent trend
A year earlier (Sep 2025) it was 7.50%, so the latest figure is 0.50 percentage points higher.
Over the past five years the average was 7.12%, with a range from 1.50% to 9.25%. The latest value is above that five-year average.
Historical context
This data series starts in Mar 1998 and has 343 monthly observations. The latest reading is higher than 64% of all of them.
The highest value on record is 18.00% (Oct 2008) and the lowest is 0.75% (Nov 2020). The long-run average is 7.07%.
Compared with other countries
Among 59 economies with recent data, Iceland ranks 6th from the top. The median across all these economies is 2.75%, so Iceland is above the typical country.
Within Europe & Central Asia (34 economies with data) it ranks 3rd; the regional median is 2.50%.
Context
Latest inflation is 5.6% (Aug 2026), so the real policy rate — policy rate minus inflation — is about 2.37%. A positive real rate means borrowing costs are above the pace of price increases.
The rate changed in 9 of the last 24 months.
Statistics
- Latest
- 8.00%Sep 2026
- Previous
- 8.00%
- 5-year average
- 7.12%
- Long-run average
- 7.07%since Mar 1998
- All-time high
- 18.00%Oct 2008
- All-time low
- 0.75%Nov 2020
- Observations
- 343Monthly
Recent Data
| Period | Value | Change |
|---|---|---|
| Sep 2026 | 8.00% | ■ 0.00 pp |
| Aug 2026 | 8.00% | ▲ +0.25 pp |
| Jul 2026 | 7.75% | ■ 0.00 pp |
| Jun 2026 | 7.75% | ■ 0.00 pp |
| May 2026 | 7.75% | ▲ +0.25 pp |
| Apr 2026 | 7.50% | ■ 0.00 pp |
| Mar 2026 | 7.50% | ▲ +0.25 pp |
| Feb 2026 | 7.25% | ■ 0.00 pp |
| Jan 2026 | 7.25% | ■ 0.00 pp |
| Dec 2025 | 7.25% | ■ 0.00 pp |
| Nov 2025 | 7.25% | ▼ −0.25 pp |
| Oct 2025 | 7.50% | ■ 0.00 pp |
| Sep 2025 | 7.50% | ■ 0.00 pp |
| Aug 2025 | 7.50% | ■ 0.00 pp |
| Jul 2025 | 7.50% | ■ 0.00 pp |
| Jun 2025 | 7.50% | ■ 0.00 pp |
| May 2025 | 7.50% | ▼ −0.25 pp |
| Apr 2025 | 7.75% | ■ 0.00 pp |
| Mar 2025 | 7.75% | ▼ −0.25 pp |
| Feb 2025 | 8.00% | ▼ −0.50 pp |
| Jan 2025 | 8.50% | ■ 0.00 pp |
| Dec 2024 | 8.50% | ■ 0.00 pp |
| Nov 2024 | 8.50% | ▼ −0.50 pp |
| Oct 2024 | 9.00% | ▼ −0.25 pp |
| Sep 2024 | 9.25% | ■ 0.00 pp |
| Aug 2024 | 9.25% | ■ 0.00 pp |
| Jul 2024 | 9.25% | ■ 0.00 pp |
| Jun 2024 | 9.25% | ■ 0.00 pp |
| May 2024 | 9.25% | ■ 0.00 pp |
| Apr 2024 | 9.25% |
Interest Rate — Iceland vs Peers
Latest available reading for each economy (periods may differ). Iceland highlighted.
More Iceland indicators
Understanding Interest Rate — a simple guide
What it measures
The central bank’s main policy rate — the rate at which it lends to, or pays, commercial banks. It anchors short-term borrowing costs across the economy.
How it is calculated
This is not calculated from a formula — it is decided by the central bank’s monetary policy committee at scheduled meetings. The figure shown is the official policy rate at the end of each month.
If the central bank raises its policy rate from 6.0% to 6.5%, banks usually raise their loan and deposit rates soon after, making home loans and business borrowing more expensive.
A higher policy rate makes borrowing costlier. Central banks usually raise rates to bring down high inflation. Higher rates can slow spending and investment.
A lower policy rate makes borrowing cheaper and is usually used to support growth when the economy is weak or inflation is low.
Why it matters for the economy and markets
Policy rates influence loan and deposit rates, bond yields, currency values and the discount rate investors apply to future earnings. Changes are among the most closely watched events in financial markets.
How to read it
Look at the direction and pace of changes as well as the level. Comparing the policy rate with inflation gives the “real” rate: a policy rate above inflation is generally considered restrictive, below it accommodative.
What to look at alongside it
Inflation (to calculate the real interest rate), bond yields, currency movements and bank lending growth.
Key terms
- Repo rate
- The rate at which a central bank lends short-term money to commercial banks (India’s policy rate).
- Rate hike / cut
- An increase / decrease in the policy rate.
- Real interest rate
- The policy rate minus inflation.
- Basis point (bp)
- One hundredth of a percentage point — 25 bp = 0.25%.
Data source
Bank for International Settlements (BIS) (series WS_CBPOL), monthly data from Mar 1998 to Sep 2026. Values are shown exactly as published by the source and may be revised later.
How to use the chart
Use the 5Y / 10Y / 25Y / Max buttons to change the time range, or drag the slider under the chart. Hover (or tap) on the line to see the exact value for any period. Dashed lines and hatched bars are IMF projections, not actual data. The “Download CSV” button gives you the full data series.
Frequently asked questions
What is the current interest rate of Iceland?
What is the highest and lowest interest rate of Iceland?
What does interest rate measure?
Data are sourced from official international organisations (IMF, World Bank, BIS) and national authorities, and are shown for educational and informational purposes only. They are not investment advice and no recommendation is made. Figures may be revised by the source; IMF figures for the current and future years are projections. This page was last updated on Saturday, October 17, 2026.