Iceland central bank cuts policy rate to record low 2020 growth forecast-Reuters News-International

[Copenhagen 28th Reuters]-The Central Bank of Iceland lowered the deposit rate of the main policy interest rate by 0.25 percentage points to a record low of 3.50%. He said that it would take more time than expected to recover next year's growth rate forecast and to recover the main industry of tourism.

The central bank cut interest rates by 0.25 percentage points in June.

This time, the growth rate forecast for next year has been revised downward from 2.5% to 1.9%.

“The headwinds on tourism are expected to last longer than expected and continue for 2020, lowering the growth rate outlook for the year,” he said.

In addition to the sluggish tourism industry, the bankruptcy of low-cost airline company WOW Air and the problems with Iceland Airlines associated with the suspension of Boeing 737 MAX operations have also cast a shadow on the economy.

According to the central bank, the number of flights to and from Iceland in the second quarter decreased by about 25% year-on-year, and the number of tourist visits decreased by 19%.

The central bank predicted that the impact of the global disruption of the airline due to the suspension of Boeing 737 MAX aircraft will continue in 2020.

The growth rate forecast for this year is expected to be 0.2%. In May, it was expected to be minus 0.4%.