Iceland Delivers Emergency Stimulus to Fight Virus Fallout

The 7-day term deposit rate was reduced by 0.5 percentage points to 2.25%, marking an emergency cut delivered one week ahead of a scheduled policy meeting. Tourism makes up almost half the country’s export revenue. So a severe blow to demand for travel could have devastating consequences. That’s left Iceland particularly vulnerable to the spread of the coronavirus, as airlines ground planes and tourists cancel their trips. The central bank cut average reserve requirements for banks to zero from 1%, in a bid to boost liquidity, while the fixed reserve requirement was kept unchanged at 1%. “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.

- Bloomberg -



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