Earthquakes delayed interest rate cuts by 6 to 12 months

Earthquakes in the Reykjanes peninsula had a major impact on the real estate market in Iceland and probably the consequences have been to delay the Central Bank’s interest rate cut process by six to twelve months.

This is stated by Ásgeir Jónsson, Governor of the Central Bank, in a detailed interview in the field of questions.

Trying to navigate the economy through a turmoil

« We have been trying to navigate the economy through this unrest, which they have been in many ways. And I would like to mention, just last year, Grindavík’s evacuation and the purchase of housing there was a new clash for the real estate market. »

One percent of the nation ends up on the street.

« Yes and we see it in the figures now that it was just a lot for us to take and I think as I have said that this has delayed us about six to twelve months regarding the implementation of monetary policy. »

The real estate inflation would have gone from the system

Grindavík effect.

« Yes. You can’t tell what things were like, but I think it was very likely that these real estate inflation would have gone out of the system. »

What would it mean in interest. They are now 7.5%. Were they in 5%?

«  » I don’t know. This has an impact. « 

The interview with Ásgeir Jónsson can be seen in its entirety in the player below: