Iceland cuts interest rates by half a point

Bloomberg

Iceland’s central bank cut its benchmark interest rate to its lowest level ever at an emergency meeting called to counter the impact of the coronavirus.
The 7-day term deposit rate was cut by 0.5 percentage points to 2.25%, Sedlabanki said in a statement.
“Furthermore, the Committee has decided to lower deposit institutions’ average reserve requirement from 1% to 0%. The fixed reserve requirement will remain unchanged at 1%. The reduction in the average reserve requirement and changes in the treatment of the fixed reserve requirement in liquidity rules will ease the banks’ liquidity position and give them greater scope to respond to changed conditions in the domestic economy.”
“With these actions, the bank is easing the monetary stance in view of the worsening economic outlook following the accelerated spread of the Covid-19 virus,” the bank said in a statement.
Iceland’s economy has been slowing, partly as a result of a downturn in its main export, tourism. That was before the coronavirus spread to the north Atlantic island.
Wednesday’s decision comes in the wake of an interest rate cut by the Bank of England.
Iceland’s central bank was originally scheduled to hold its next rate-setting meeting on March 18.