Inga Sæland hopes Ásgeir will cut interest rates

Education and Children’s Affairs Minister Inga Sæland hopes Central Bank Governor Ásgeir Jónsson will cut interest rates in Iceland, she told mbl.is in response to the latest inflation figures published by Statistics Iceland.

“It is unexplained that policy rates here are held percentage points above inflation, which I think is somewhat unique globally,” Sæland said.

She welcomed the fact that inflation had not risen from the previous month. “It hasn’t yet realised that it is supposed to go down, but it probably will in the next reading,” she said. Sæland expects both inflation and interest rates to ease in 2027.

She said many families in Iceland were struggling, and described mass layoffs as a major concern. “People are losing their jobs and their footing, and moving into our unemployment system,” she said.

Sæland also pointed to agreements with the country’s labour movement and employers, and increased funding for the development of the private housing market. She said the government was introducing a rent cap and providing more support to tenants, adding that the measures would be welcomed by the roughly 100,000 people who rent homes, despite mixed reactions.

“We know that our housing market has driven the terrible inflation we have been dealing with for far too long,” she said.