Loan terms for households have deteriorated rapidly, and the Central Bank’s interest rate cut this morning was primarily a response to last month’s Supreme Court ruling on interest rates—rather than a reaction to the shocks that have recently hit the economy, including the equipment failure at Norðurál, the shutdown of PCC at Bakki, and the collapse of Play. However, such shocks may influence the duration of the interest-rate-cutting cycle.Central Bank: Loan market turmoil forced today’s rate cut
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November 19, 2025
Loan terms for households have deteriorated rapidly, and the Central Bank’s interest rate cut this morning was primarily a response to last month’s Supreme Court ruling on interest rates—rather than a reaction to the shocks that have recently hit the economy, including the equipment failure at Norðurál, the shutdown of PCC at Bakki, and the collapse of Play. However, such shocks may influence the duration of the interest-rate-cutting cycle.
