Iceland slashes interest rate as economy seen shrinking

  • News Digest

May 23, 2019-

Iceland’s central bank on Wednesday cut its key interest rate by a half-point to 4.0 percent to stimulate the economy, as it forecasted a contraction this year for the first time in almost a decade. “The GDP growth outlook has changed markedly since the bank’s last forecast. Output is now forecast to contract by 0.4 percent this year instead of rising by 1.8 percent, as was forecast in February,” the bank said in a statement. The bank attributed the deterioration in the outlook mainly to declining tourism and reduced marine product exports. “As a result, the positive output gap will close and slack emerge in the near future,” the bank said. A report published by the country’s biggest bank Landsbankinn in January confirmed a slowdown in tourism in 2018. (AFP)

Published: 23-05-2019 10:08

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