Icelandic rates to be cut soon despite strong economy

Ahead of the Central Bank of Iceland’s meeting next week, today’s data revealed that Icelandic GDP expanded by a strong 2.6% in Q4. Despite the strength of the economy, the recent appreciation of the króna points to looser monetary policy. On balance, though, we think that the Bank will wait to see if the króna’s rise will be sustained before cutting interest rates at its next meeting in May.

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