The Central Bank of Iceland raised its interest rates by 25 basis points as the domestic economy continues to recover with robust growth in demand and growing signs of a rebound in labour and real estate markets.
But the central bank cautioned that the global economic outlook had become more unclear and it would be ready to action if warranted.
"Uncertainty about the global economy has increased in recent weeks, not least because of the financial crisis in Europe. This causes additional uncertainty about the domestic economic and inflation outlook. In the near future, monetary policy may need to respond to developments that could significantly affect output growth and inflation in Iceland," the bank said following a meeting of its monetary policy committee.
The central bank's four key interest rates would be raised by 25 basis points, with the overnight lending rate now at 6.75 percent and the seven-day collateralised lending rate at 5.75 percent.
The central bank has been on a path of raising interest rates this year, increasing rates by 50 basis points on May 16 following a 25 basis point hike on March 21.
www.CentralBankNews.info
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